Yellen warns US may hit debt limit in October

Sep 8, 2021, 7:36 AM | Updated: Sep 9, 2021, 1:22 am

WASHINGTON (AP) — Treasury Secretary Janet Yellen is warning Congress that she will run out of maneuvering room to prevent the U.S. from broaching the government’s borrowing limit in October.

In a letter to congressional leaders Wednesday, Yellen said that she still could not provide a specific date for when she will be unable to keep the government funded, absent action by Congress to raise the debt limit.

“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 wrote.

Yellen said recent measures to address the debt limit had enjoyed “broad bipartisan support,” But Republicans have said they will oppose an effort by Democrats to deal with the debt limit by attaching a provision to an emergency budget bill that Congress will need to pass before the start of the budget year on Oct. 1. That legislation is needed to avoid a government shutdown.

Instead, some Republicans have said Democrats should attach a debt limit increase to the $3.5 trillion infrastructure plan that Democrats are hoping to pass without Republican votes, using a process known as “budget reconciliation.”

But House Speaker Nancy Pelosi said Wednesday that Democrats will not be putting the debt limit increase in the reconciliation measure. She said Democrats have several “options” for raising the debt ceiling but she did not specify for that they were.

She said Democrats supported lifting the borrowing limit under Trump “because it’s the responsible thing to do. I would hope that the Republicans would act in a similarly responsible way.”

The debt limit is the amount of money Congress allows Treasury to borrow to keep the government running. When the debt limit was suspended for two years in July 2019, the public debt subject to the limit stood at $22 trillion.

When the debt limit was re-instated, the limit reset to $28.4 trillion, the existing level of debt. The big jump in the past two years reflected the massive amounts of support Congress voted to approved to help individuals and businesses get through a global pandemic.

Yellen has been using what is termed in law “extraordinary measures” which cover a variety of bookkeeping maneuvers Yellen can take to remove debt from various government trust funds including federal workers’ pensions. Once the debt limit impasse is resolved, the funds removed from the trust funds is restored with interest.

Yellen urged Congress to act without delay.

“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.

While Republicans in Congress have often used the debt limit debate to extract budget concessions from Democratic presidents, lawmakers have never failed to raise the debt limit or suspend it to allow the government to keep borrowing.

However, in 2011, a budget battle between the Obama administration and Republicans dragged on for so long that the credit rating agency Standard & Poor’s downgraded a portion of Treasury debt from its AAA rating for the first time in history.

“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 and consumer confidence, raise short-term borrowing costs for taxpayers and negatively impact the credit rating of the United States,” Yellen said.

“A delay that calls into question the federal government’s ability to meet all of its obligations would likely cause irreparable damage to the U.S. economy and global financial markets,” she said. “I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible.”

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

FILE - A Bed Bath & Beyond sign is shown in Mountain View, Calif., May 9, 2012. Shares in Bed Bath ...
Associated Press

Bed Bath & Beyond tumbles after influential investor exits

NEW YORK (AP) — The newest meme stock on Wall Street, Bed Bath & Beyond, is tumbling even further in after-hours trading Thursday after a high-profile activist investor confirmed that’s he’s bailed out of the stock. Ryan Cohen, the co-founder of Chewy who helped ignite a couple of meme stocks to jaw-dropping heights, confirmed in […]
16 hours ago
Associated Press

Apple warns of security flaw for iPhones, iPads and Macs

SAN FRANCISCO (AP) — Apple disclosed serious security vulnerabilities Wednesday for iPhones, iPads and Macs. The software flaws could potentially allow attackers to take complete control of these devices, Apple said in two securityreports. The company said it is “aware of a report that this issue may have been actively exploited.” Security experts have advised […]
16 hours ago
The Trump Organization's former Chief Financial Officer Allen Weisselberg leaves from court, Thursd...
Associated Press

What’s next for Trump Organization after Weisselberg plea?

NEW YORK (AP) — The numbers guy did the math: Allen Weisselberg — a longtime loyal lieutenant to Donald Trump — could have gotten years in prison if he went to trial and failed to beat tax evasion allegations. But if he agreed to testify in an upcoming trial of the former president’s company, he […]
16 hours ago
FILE - This June 23, 2011, file booking photo provided by the U.S. Marshals Service shows James "Wh...
Associated Press

Justice Dept.: 3 men charged in Whitey Bulger’s killing

BOSTON (AP) — Three men, including a Mafia hitman, have been charged in the killing of notorious Boston crime boss James “Whitey” Bulger in a West Virginia prison, the Justice Department said Thursday. The charges against Fotios “Freddy” Geas, Paul J. DeCologero and Sean McKinnon come nearly four years after Bulger’s killing, which raised questions […]
16 hours ago
FILE - Opera tenor Placido Domingo attends an awards ceremony in the Royal Theatre in Madrid, Spain...
Associated Press

Placido Domingo’s name comes up in Argentina sex sect probe

BUENOS AIRES, Argentina (AP) — Opera star Placido Domingo’s name has appeared in an investigation of a sect-like organization in Argentina that also had U.S. offices and whose leaders have been charged with crimes, including sexual exploitation. Domingo, the Spanish opera singer who has faced accusations of sexual harassment from numerous women over the past […]
16 hours ago
Associated Press

Kansas City police: Toddler dies with drugs in system

KANSAS CITY, Mo. (AP) — A Kansas City woman has been charged after her 2-year-old son was found dead in a home strewn with apparent drugs and drug paraphernalia, prosecutors announced Thursday. Michaela Chism, 36, was charged with two felony counts of endangering the welfare of a child, who police found dead on Wednesday, the […]
16 hours ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

Here are 4 signs the HVAC unit needs to be replaced

Pool renovations and kitchen upgrades may seem enticing, but at the forefront of these investments arguably should be what residents use the most. In a state where summertime is sweltering, access to a functioning HVAC unit can be critical.
...
Dr. Richard Carmona

Great news: Children under 5 can now get COVID-19 vaccine

After more than two years of battle with an invisible killer, we can now vaccinate the youngest among us against COVID-19. This is great news.
...
Carla Berg, MHS, Deputy Director, Public Health Services, Arizona Department of Health Services

Vaccines are safe if you are pregnant or breastfeeding

Are you pregnant? Do you have a friend or loved one who’s expecting?
Yellen warns US may hit debt limit in October