Unless the debt ceiling is raised, the US may run out of money by October 18th, according to Yellen.
Treasury Secretary Janet Yellen warned Tuesday that the US Treasury will likely run out of cash on October 18 unless Congress boosts the federal borrowing cap.
“Treasury would be left with very few resources that would be swiftly depleted” beyond the deadline. It’s unclear whether we’ll be able to meet all of the country’s obligations after that date,” she said.
Despite pressing for it under their party’s previous president Donald Trump, Republicans in the US Senate have steadfastly refused to accept an increase or suspension of the debt ceiling.
They blocked a Democratic attempt on Monday to pass a 14-month suspension along with a temporary budget.
The House passed a bill last week to keep the government open until December 3 while they debate a big 10-year social spending package, but the Senate, which is evenly divided, has so far refused to consider the bill.
The government would be unable to pay public employees’ salaries, send payments to pensioners, or service the nation’s debt without an increase.
Yellen reiterated the importance of swift approval, saying that “waiting until the last minute might undermine business and consumer confidence, raise borrowing costs for taxpayers, and severely impact the United States’ credit rating for years to come.”
“Failure to act quickly might cause significant financial market disruptions, as increased uncertainty can aggravate volatility and destroy investor confidence,” she warned.
Raising the debt ceiling does not raise spending; rather, it authorizes Treasury to fund projects that Congress has already approved.
Mitch McConnell, the Senate Republican leader, has used the debt ceiling as a political hammer to oppose President Joe Biden’s spending plans, claiming that Democrats must raise the ceiling without the assistance of the opposition.
The debt ceiling was delayed for two years on a bipartisan basis under Trump, after McConnell warned that not doing so would be a “catastrophe.”
With the country’s debt at $28.4 trillion, the cap was reintroduced on August 1.