A default, which has never before occurred in U.S. history would “likely cause irreparable damage to the U.S. economy and global financial markets,” Yellen said.
- The Treasury Department could run out of room next month to keep paying the government’s bills on time unless Congress steps in to suspend or raise the federal borrowing limit, Secretary Janet Yellen said in a letter to congressional leaders Wednesday.
- Time to raise or suspend the limit is running short against a backdrop of deep partisan disagreements over President Biden’s spending plans, complicating the path forward on Capitol Hill.
- Since the debt limit was reinstated on Aug 1, the Treasury has been forced to resort to “extraordinary measures” to service debt, such as by suspending investments in certain federal retirement and health funds.
- Yellen said there is considerable uncertainty surrounding exactly when the Treasury will run out of funding in part because of the coronavirus pandemic and spending associated with COVID relief programs.