US Treasury Secretary Janet Yellen said that the Treasury Department’s “extraordinary measures” to temporarily finance the government will likely be exhausted in October, urging Congress to raise or suspend the debt limit as soon as possible.
“Based on our best and most recent information, the most likely outcome is that cash and extraordinary measures will be exhausted during the month of October,” Yellen said in a letter to congressional leaders on Wednesday.
“Once all available measures and cash on hand are fully exhausted, the United States of America would be unable to meet its obligations for the first time in our history,” Yellen said, urging Congress to protect the full faith and credit of the country by acting as soon as possible, reports xinhua news agency.
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the US,” she said.
“At a time when American families, communities, and businesses are still suffering from the effects of the ongoing global pandemic, it would be particularly irresponsible to put the full faith and credit of the United States at risk.”
As part of a bipartisan budget deal enacted in August 2019, Congress suspended the debt limit through July 31, 2021.
After the debt limit was reinstated on August 1, the Treasury Department began using “extraordinary measures” to continue to finance the government on a temporary basis.
The Congressional Budget Office has warned that the US is at risk of a default in October or November unless the Congress raises or suspends the debt limit.
The debt limit, commonly called the debt ceiling, is the total amount of money that the government is authorised to borrow to meet its existing legal obligations, including social security and medicare benefits, interest on the national debt, and other payments.