The US government may run out of money by December 15, Treasury Secretary Janet Yellen warned Tuesday in a letter encouraging lawmakers to raise the country’s debt limit to avoid a default.
Democrats and Republicans in Washington have squabbled in recent months over raising the legal limit on how much debt the United States can accumulate.
In October, they came within days of hitting the ceiling before agreeing to a $480 billion stop-gap hike, which Yellen said would keep the government running until December 3.
In a letter to House Speaker Nancy Pelosi, the Treasury secretary extended her prediction for when the deadline would be hit by about two weeks. But she warned: “there are scenarios in which Treasury would be left with insufficient remaining resources to continue to finance the operations of the US government beyond this date.”
“To ensure the full faith and credit of the United States, it is critical that Congress raise or suspend the debt limit as soon as possible,” Yellen wrote.
The latest imbroglio comes in the midst of long-running negotiations over Democratic President Joe Biden’s “Build Back Better” plan to invest $1.85 trillion in American social social services and education.
The Republican minority in Congress opposes the measure, and has said it will not agree to debt ceiling increases to pay for it, although much of the debt the US government takes on funds outlays approved by prior Democratic and Republican administrations.
In October, they argued that Democrats who lead the House and Senate should raise the limit unilaterally, before eventually dropping their blockade to allow passage of the temporary increase.
The United States has never defaulted on its debt and its Treasury bonds play a major role in the global financial system, but economists warn a failure to raise the ceiling would cause a massive financial crisis.