United States Treasury Secretary Janet Yellen warned in a letter to lawmakers on Capitol Hill on Wednesday that unless the debt limit is raised before October 1st, the country will default on its obligations to its creditors.
The national debt is approaching a dizzying 28.8 trillion dollars, and the federal budget deficit has ballooned past a record $3 trillion.
Simply put, the United States is dangerously close to running out of cash unless Congress takes immediate action.
“After the debt limit was reinstated on August 1, Treasury began employing certain extraordinary measures to continue to finance the government on a temporary basis. These measures, which are authorized by law and have been used in previous debt limit impasses, include a suspension of certain investments in the Civil Service Retirement and Disability Fund, the Postal Service Retiree Health Benefits Fund, and the Government Securities Investment Fund of the Federal Employees’ Retirement System Thrift Savings Plan. Once all available measures and cash on hand are fully exhausted, the United States of America would be unable to meet its obligations for the first time in our history,” Yellen wrote.
“Based on our best and most recent information, the most likely outcome is that cash and extraordinary measures will be exhausted during the month of October. We will continue to update Congress as more information becomes available,” she said, recalling that the last time the United States squabbled over increasing the borrowing limit, its credit rating was downgraded, leading to chaos throughout the global financial system.
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” Yellen added. “A delay that calls into question the federal government’s ability to meet all its obligations would likely cause irreparable damage to the U.S. economy and global financial markets. 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.”
What's Your Reaction?
Brandon is a political writer for the Hill Reporter specializing in current events, breaking news, and scientific discovery. Brandon holds a Bachelor of Music degree from Indiana University. He lives in New York City.