United States Treasury Secretary Janet Yellen shifted her forecast of when the country could reach its debt ceiling, pushing it forward to Dec. 15, warning lawmakers on Tuesday but giving Congress more time to strike a deal from her initial estimate of Dec. 3.
Yellen's latest projection gives an additional 12 days before the federal government could reach the debt ceiling. However, she still warned lawmakers to act quickly to raise the debt ceiling because there are scenarios in which the Treasury would have not enough resources to fund the operations of the government beyond her given date.
Raising of Debt Ceiling
In a statement, Yellen said that it was crucial for Congress to raise or suspend the debt limit of the government as soon as possible. In October, lawmakers voted along party lines in an attempt to raise the borrowing cap by a staggering $480 billion.
The proposal was seen as a short-term fix that followed weeks of negotiations on Capitol Hill between officials. Republican lawmakers repeatedly prevented Democrats' attempts to raise the ceiling and demanded that the latter use the budget reconciliation process that is part of deliberations on U.S. President Joe Biden's sweeping social spending bill, Fox Business reported.
If lawmakers fail to raise the debt ceiling in time, the United States federal government would default for the time in history. Yellen sent a letter to House Speaker Nancy Pelosi, telling the latter that the revised estimate was in part a result of Biden's enactment of the $1 trillion infrastructure plan signed into law earlier this week.
In Yellen's letter, she noted that Biden signed the Infrastructure Investment and Jobs Act, which appropriates $118 billion for the Highway Trust Fund. The Treasury Secretary added that the funds of the bill must be transferred into the Highway Trust Fund within a month after the legislation is enacted, which will happen on Dec. 15.
"While I have a high degree of confidence that Treasury will be able to finance the U.S. government through December 15 and complete the Highway Trust Fund investment, there are scenarios in which the Treasury would be left with insufficient remaining resources to continue to finance the operations of the U.S. government beyond this date," said Yellen, CNBC reported.
Risking Millions of Americans' Well-Being
Despite the 12-day extension, Senate Minority Leader Mitch McConnell warned after last month's vote that no Republican senator will be willing to cooperate with Democrats on "any future effort to mitigate the consequences of Democratic mismanagement."
In a letter sent to Biden last month, McConnell said that the Democratic president's allies on Capitol Hill now had all the time they said they needed to address the debt ceiling crisis through standalone reconciliation. The senate minority leader added that opposing party officials now also had the tools to do it. McConnell argued that Democrats cannot make up another crisis and request his assistance.
Last month, Yellen said that American lawmakers' failure to raise the debt ceiling would more likely cause a recession. The Treasury Secretary warned that if Congress were unable to act and address the issue, it would be putting Social Security payments at risk for 50 million American people and withholding paychecks for military members. She also argued that 30 million families would have their child tax credit payments placed in jeopardy, NBC News reported.
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