US Treasury Secretary Janet Yellen has urged Congress to raise the debt limit as soon as possible to avoid a potential default.
“As you know, the Bipartisan Budget Act of 2019 suspended the statutory debt limit through Saturday, July 31, 2021. I am writing to inform you that beginning on Sunday, August 1, 2021, the outstanding debt of the US will be at the statutory limit,” Yellen wrote in a letter sent to congressional leaders on Saturday.
“If Congress has not acted to suspend or increase the debt limit by Monday, August 2, 2021, Treasury will need to start taking certain additional extraordinary measures in order to prevent the United States from defaulting on its obligations.”
She added that the Treasury was not able to currently provide a specific estimate of how long extraordinary measures will last due to “considerable uncertainty”, reports Xinhua news agency.
“However, there are scenarios in which cash and extraordinary measures could be exhausted soon after Congress returns from recess” in mid-September, she noted, warning failure to meet those obligations would “cause irreparable harm” to the US economy and the livelihoods of all Americans.
“Even the threat of failing to meet those obligations has caused detrimental impacts in the past, including the sole credit rating downgrade in the history of the nation in 2011.
“In recent years Congress has addressed the debt limit through regular order, with broad bipartisan support. I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible,” said the Treasury Secretary.
Yellen’s letter came after the Congressional Budget Office (CBO) warned on Wednesday that the US is at risk of a default in October or November unless the Congress raises or suspends the debt limit.
“If that occurred, the government would be unable to pay its obligations fully, and it would delay making payments for its activities, default on its debt obligations, or both,” the CBO said.
At present, the US national debt has exceeded $28.55 trillion.