Politico | US Treasury Secretary Janet Yellen warns of likely October debt cliff and incoming ‘irreparable damage’
- She again called on Congress to take swift action to address the debt limit, cautioning that uncertainty in the meantime could hurt the global economy
- House Speaker Pelosi reiterated that Democrats will pursue a bipartisan vote to waive the debt limit, rather than using the reconciliation process
This story is published in a content partnership with POLITICO. It was originally reported by Jennifer Scholtes and Caitlin Emma on politico.com on September 8, 2021.
US Treasury Secretary Janet Yellen warned congressional leaders on Wednesday that she expects the country's debt limit will hit its breaking point next month, dealing a likely blow to the global economy without quick action.
In a letter to top lawmakers in both parties, Yellen said the Biden administration’s “best and most recent” calculations suggest that the United States will run out of cash “during the month of October”. If Congress continues to push off action on the debt limit over the next few weeks, she warned, the uncertainty alone could hurt financial markets.
“We have learned from past debt limit impasses,” the secretary wrote, “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.”
Hearkening to the 2011 debt limit stand-off that resulted in the nation’s credit rating being downgraded for the first time in US history, Yellen cautioned that “a delay that calls into question the federal government’s ability to meet all its obligations would likely cause irreparable damage to the US economy and global financial markets”.
House Speaker Nancy Pelosi reiterated Wednesday that Democrats will pursue a bipartisan vote to waive the debt limit, rather than using the reconciliation process to bypass the need for Republican support in the Senate.
