US Treasury Secretary Janet Yellen has warned congressional leaders that the US is on track to default on the national debt in October if the White House and Congress are unable to raise the debt limit.
In a letter, Yellen said that the Treasury Department would likely run out of cash and exhaust “extraordinary” measures to keep the federal government within its legal borrowing limit at some point next month, The Hill reported.
“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.
“Given this uncertainty, the Treasury Department is not able to provide a specific estimate of how long the extraordinary measures will last. However, 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,” she continued, the report said.
The Treasury Department has taken so-called extraordinary measures to prevent the US from defaulting on the national debt since the federal debt limit was reimposed on August 1. If the Treasury Department runs out of ways to stave off a default without borrowing more money, the inability of the US to pay its debts could send debilitating shockwaves through the financial system.