Finance Minister Janet Yellen on Tuesday warned congressional leadership that the federal government could default on its debt next month if they do not intervene to raise the debt ceiling.
In a letter to top lawmakers, Ms. Yellen predicted that after Dec. 15, there are scenarios where the Treasury could have “insufficient resources to continue financing the operation of the U.S. government.”
Ms. Yellen added that she has “a high degree of confidence” in the Treasury’s ability to make debt payments through Dec. 15. That’s two weeks longer than her initial December 3 forecast.
However, she warned that the United States could run out of money shortly after transferring $ 118 billion to the Highway Trust Fund to comply with the two-part infrastructure law that Mr Biden signed this week.
The bill requires Ms. Yellen will transfer motorway funds exactly one month after its adoption, which would be on 15 December. Ms. Yellen said the Treasury Department may not be able to keep the U.S. solvent after it moved the funds.
“As the Federal Government’s cash flow is subject to inevitable variation, I will continue to update Congress as more information becomes available,” she wrote.
Ms. Yellen has repeatedly warned that a default would lead to economic chaos, including a recession and jeopardize the role of the US dollar as the global reserve currency.
Congress passed an increase in the debt ceiling in early October, but it is unlikely Democrats will be able to pass the next increase along party lines.
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