Yellen Updates Debt Ceiling Breach Date, Says US Funds Will Only Last Until Dec. 15
Treasury Secretary Janet Yellen said that the U.S. will reach its debt ceiling on Dec. 15, giving Congress two additional weeks to come to an agreement.
In a letter to Speaker of the House Nancy Pelosi November providing an update on the Treasury’s ability to continue to finance the operations of the federal government under the constraints of the debt limit, Yellen revised her Oct. 18 debt ceiling estimate.
“In my October 18 letter to you, I noted that the recent $480 billion increase in the debt limit provided a high degree of confidence that Treasury would be able to finance the U.S. government through Dec. 3, 2021. Based on our most recent information, I am now able to further refine that projection,” Yellen wrote in the letter.
Her revised timeline stems from President Joe Biden’s signing the Infrastructure Investment and Jobs Act, “which appropriates $118 billion for the Highway Trust Fund.”
“These funds must be transferred into the Highway Trust Fund within one month after the enactment of the legislation, and the transfer will be completed on December 15,” according to the letter. “Promptly thereafter, the funds will be invested in nonmarketable Treasury securities subject to the debt limit. While I have a high degree of confidence that Treasury will be able to finance the U.S. government through December 15 and complete the Highway Trust Fund investment, there are scenarios in which Treasury would be left with insufficient remaining resources to continue to finance the operations of the U.S. government beyond this date.”
In early October, after much drama and last-minute decisions, an agreed-upon deal between Republicans and Democrats was reached, with the Senate passing an extension of the debt limit that avoided a default on the national debt. The agreement allowed the national debt limit to increase by $480 billion, a sum the Treasury Department estimated would allow it to pay bills until Dec. 3, as GOBankingRates reported at the time.
The debt ceiling limits the total amount of money the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds and other payments. It does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past, according to the treasury secretary.
In addition to the debt limit, the administration is also trying to pass Biden’s $1.75 trillion Build Back Better Act.
As GOBankingRates reported, Pelosi “told her colleagues that the House isn’t leaving for Thanksgiving until Build Back Better is passed, according to two sources familiar with the matter. There’s talk of a potential Saturday vote, but it could happen sooner than that depending on timing of information from CBO [Congressional Budget Office].”
Senate Majority Leader Chuck Schumer said on Tuesday that his chamber aims to pass the Build Back Better Act before Christmas, according to CNBC.
More From GOBankingRates