Treasury Secretary Janet Yellen warned congressional leaders Friday that failing to raise the debt ceiling would risk “irreparable harm to the U.S. economy and the livelihoods of all Americans.”
In a letter, Yellen said that she did not know how long the Treasury Department could prevent the U.S. from defaulting on its debt, which could carry catastrophic economic consequences. The debt ceiling is set to expire on Aug. 1.
“In recent years Congress has addressed the debt limit through regular order, with broad bipartisan support,” Yellen wrote. “I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible.”
The debt ceiling does not affect government spending, but instead limits how much additional debt the government can take while paying for provisions that have already been passed by Congress and signed into law. Congress last raised the debt ceiling in 2019.
Yellen’s letter was sent to House Speaker Nancy Pelosi, House Minority Leader Kevin McCarthy, Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell and the top Democrats and Republicans House Ways and Means and Senate Finance committees. (RELATED: Government Deficit On Pace To Be Second Largest In US History)
President Joe Biden speaks as Treasury Secretary Janet Yellen listens during a White House meeting on April 9. (Amr Alfiky/Pool/Getty Images)
Senate Republicans this week threatened to not support a debt ceiling raise unless Democrats adopted debt reduction provisions. Democrats have refused to do so and have attacked Republicans for risking the nation’s economic standing over what they say are partisan demands.
Yellen said that the Treasury’s ability to mitigate any economic fallout could only last until September, earlier than the Congressional Budget Office has projected. She added that a failure to raise the ceiling would damage America’s financial standing with other countries.
“This is why no President or Treasury Secretary of either party has ever countenanced even the suggestion of a default on any obligation of the United States,” Yellen said.
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