WASHINGTON -- Treasury Secretary Janet Yellen warned Congress on Wednesday that the U.S. government is likely set to breach the debt ceiling some time in October, and she said lawmakers should not be "waiting until the last minute" to address the risk.
Yellen's missive threatened to turn up the political heat on lawmakers in what already is a jam-packed month of September, as some on Capitol Hill thought they had more time before they needed to raise or suspend the statutory limit on federal borrowing. Once the government reaches its borrowing limit, it becomes very difficult for the Treasury to pay all of its bills.
"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," Yellen wrote in her letter to Congress.
"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 said.
The letter only added to the uncertainty on Capitol Hill at a moment when Democratic leaders have no shortage of fiscal and economic issues on the horizon. Along with the debt ceiling, they need to work with Republicans to keep the government funded, preventing a potential shutdown at the end of the month. In the same time period, Democrats also aim to adopt a $3.5 trillion tax-and-spend package that encompasses much of President Joe Biden's economic agenda. That must happen before the end of September if House Speaker Nancy Pelosi, D-Calif., seeks to keep her word on holding a vote on another package, totaling $1 trillion, to improve the nation's infrastructure.
[DOCUMENT: Read Yellen's letter to Congress » arkansasonline.com/99yellen/]
An initial analysis from the Congressional Budget Office, published in July, found the government would not breach the debt ceiling until "most likely in October or November." With that timeline potentially truncated, Senate Majority Leader Charles Schumer, D-N.Y., assured at a news conference Wednesday there are a "number of different ways we are looking at to get the debt ceiling done."
Lawmakers have scrambled in response to the debt ceiling since July, when an earlier agreement to suspend the statutory limit expired. Democrats and Republicans brokered that pause as part of a deal to keep the government running during the President Donald Trump administration.
Soon after Biden won the White House, however, Republicans signaled they would refuse to supply the votes Democrats need to raise or suspend the debt limit again. The move invoked public ire from Democratic lawmakers, who accused GOP leaders of hypocrisy and raised the prospect that their opposition could threaten the country's fiscal stability.
"When President Trump was president, we Democrats supported lifting the debt ceiling because it's the responsible thing to do," Pelosi said Wednesday. "I would hope that the Republicans would act in a similarly responsible way."
A similar standoff more than a decade ago nearly pushed the country to default, destabilizing global markets in the process. This time, Republicans have demanded that Democrats rely on their own votes to raise the debt ceiling as part of a broader, still emerging $3.5 trillion economic package they hope to adopt through reconciliation. GOP lawmakers say they are not willing to address the ceiling otherwise given their opposition to Biden's spending plans.
On Wednesday, Schumer again faulted Republicans for their refusal to vote for a debt ceiling increase, describing it as a "horrible act, a despicable act, really." But he and other Democratic lawmakers have maintained in the meantime they are unwilling to add it to their reconciliation bill, which the party can adopt over GOP opposition since its passage only requires 51 votes in the Senate.