One Month After Debt Limit Increased by $480 Billion, Treasury Secretary Warns We'll Be Out of Money Before Christmas
The U.S. could hit its debt limit on Dec. 15, Treasury Secretary Janet Yellen told lawmakers on Tuesday.
Yellen is now urging lawmakers to raise the federal debt limit, according to The New York Times. She originally suggested the limit could be hit on Dec. 3.
This extension gives Congress more time to strike a deal to raise the nation’s debt cap. But Yellen is still pushing for fast action because the Treasury could quickly run out of money and not be able to keep financing the government.
The Treasury secretary wrote a letter to Congress explaining why the debt limit has to be raised.
“[T]here are scenarios in which Treasury would be left with insufficient remaining resources to continue to finance the operations of the U.S. government beyond this date. … To ensure the full faith and credit of the United States, it is critical that Congress raise or suspend the debt limit as soon as possible,” she wrote, according to the Times.
This comes after Congress just extended the debt limit by $480 billion last month to Dec. 3 so that the government could keep borrowing from the Treasury Department.
Last month, when trying to get the limit raised, Yellen argued that failing to raise the debt ceiling would “probably cause a recession” and would risk Social Security payments, military paychecks and child tax credit payments, NBC News reported.
But it led to a standoff in Congress and nearly did not pass as Republicans were reluctant to support it.
The House voted for the debt limit extension 219-206 along party lines. But the Senate vote was a close 50-48, which only took place after the a 61-38 vote to break the filibuster that was stopping the bill’s advance.
This month, it’s a similar story as Yellen seeks to have the debt ceiling raised once again.
One of the issues in particular that is requiring more money, and thus a suspension or raise of the debt limit, is the recently passed $1 trillion infrastructure bill that Biden signed into law Monday.
With that infrastructure bill going through, money now has to be transferred to the Highway Trust Fund.
“Yesterday, the President signed the Infrastructure Investment and Jobs Act, which appropriates $118 billion for the Highway Trust Fund. These funds must be transferred into the Highway Trust Fund within one month after the enactment of the legislation, and the transfer will be completed on December 15,” Yellen wrote in her letter to Congress, according to CNBC.
Yellen told Congress that raising or suspending the ceiling will remove the possibility of a default on the country’s debt obligations.
Last month, when trying to pass a similar measure and meeting with Republican resistance, Senate Majority Leader Chuck Schumer highlighted the fact that he does not want Republicans to endanger American credit by using it as a tool of political leverage.
“America’s full faith and credit must never be used as a political bargaining chip. I hope my Republican colleagues relent from trying to make it one when we revisit this issue soon,” he said, according to NBC.
But trying to raise the debt ceiling once again could be another struggle between Republicans and Democrats in the Senate.
Last month’s extensions required some Republicans to work with Democrats, but Minority Leader Mitch McConnell warned everyone last month that it would not happen again.
The Democrats should not rely on Republican senators working with them again on “any future effort to mitigate the consequences of Democratic mismanagement,” McConnell wrote in a letter to the president.
“Your lieutenants on Capitol Hill now have the time they claimed they lacked to address the debt ceiling through standalone reconciliation, and all the tools to do it. They cannot invent another crisis and ask for my help,” he wrote.
But Yellen told Congress that government cash flows are going to have some “unavoidable variability” and she will let lawmakers know as the debt limit deadline changes.
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