WASHINGTON: The US treasury is likely to spend the steps to continue to fund the government on October 18, and will run out of money unless the congress gave rise to a federal loan hat, Janet Yellen’s treasury secretary warned on Tuesday.
After the date, “Treasury will be left with a very limited resource that will run out quickly.
It is uncertain whether we can continue to meet all the commitments of the nation after that date,” he said in a letter to the leaders of Congress.
The Republican Party in the US Senate with stubbornly refuses to support the increase or suspension of the debt ceiling, although it has urged it under the former president of their party Donald Trump.
On Monday, they blocked the efforts of democracy to approve 14-month suspension along with the temporary budget.
Yellen repeated his call in his appearance in front of the Senate Banking Committee.
“It is very important that Congress quickly discussed the debt limit.
If not, America will default for the first time in history,” Yellen said in his prepared testimony.
The house passed the size last week to keep the government open until December 3 when they continued the debate about the main 10-year social expenditure package, but the senate which was divided evenly was rejected starting the debate on the bill.
Without an increase, the government will not be able to pay salaries of public workers, send payments to retirees, or serve national debt.
Increasing the debt limit does not increase expenses, but only allows the treasury to finance projects that have been approved by the Congress, including trillions of dollars in aid launched during the Covid-19 pandemic.
Yellen said expenditure helped support US recovery, which was “stronger than other rich nations.” But failure to increase the debt ceiling – which has been done 78 times since 1960, almost always based on bipartisan – can create “disaster events for our economy.” “We must overcome this problem to respect the commitment made by this congress – and before, including those made to address the impact of health and economic pandemics,” Yellen said in his testimony.
The Federal Reserve Chair Jerome Powell, who also testified in the hearing, has also warned terrible consequences, because it has a series of former secretaries of treasury and business groups.
And in his latest letter to parliamentarians, Yellen again warned that rapid approval was very important because “waiting until the last minute can cause serious damage to business and consumer confidence, increase borrowing costs for taxpayers and negative impact on US credit rating for years come.” “The failure to act immediately can also produce substantial disorders in the financial market, because increased uncertainty can worsen volatility and erode investor confidence,” he said.
Increasing the debt ceiling has become a controversial problem in Congress over the past few years, and the 2011 deadlock caused the Global S & P ranking to reduce US debt from the coveted AAA rankings.
The Leader of the Republic of the Senate Mitch McConnell has used the debt limit as a political fortress to protest the planned expenditure of US President Joe Biden, and said the Democrats must raise the ceiling without opposition support.
Under Trump, the ceiling was suspended for two years based on bipartisan after McConnell at that time argued that it failed to do it “will be a disaster.” The hat was restored on August 1 with this country’s debt of $ 28.4 trillion.