Yellen renews pressure on Congress to address U.S. debt limit

FILE PHOTO: U.S. Treasury Secretary Janet Yellen testifies before the Senate Appropriations Subcommittee on Financial Services about the FY22 Treasury budget request on Capitol Hill, in Washington, DC, U.S., June 23, 2021. Shawn Thew/Pool via REUTERS/File Photo

WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen on Wednesday again urged Congress to tackle the nation’s debt ceiling, saying it was unclear how long Treasury’s efforts to temporarily finance the U.S. government would last and citing ongoing economic worries over the pandemic.

The “most likely outcome is that cash and extraordinary measures will be exhausted during the month of October,” Yellen wrote in a letter to lawmakers regarding the limit on U.S. government borrowing.

Democrats and Republicans are staring down a historic fiscal crisis if they do not act, which could trigger a catastrophic default on debt repayment obligations or a temporary shutdown of some federal operations.

Leaders of the Democratic-led Senate and House of Representatives are expected to force votes to lift the $28.4 trillion debt limit in late September.

The nation’s current limit was technically breached on July 31, but the Treasury Department circumvented any default by taking what it called “extraordinary measures.”

Yellen, who has previously warned Congress about a debt default, said the department could not provide a specific estimate of how long those steps would last, citing “uncertainty” and said she would update lawmakers again later.

“At a time when American families, communities, and businesses are still suffering from the effects of the ongoing global pandemic, it would be particularly irresponsible to put the full faith and credit of the United States at risk,” she wrote.

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