TOP News

Politics: Congress could face mid-December debt disaster, Yellen warns

US hits debt ceiling, leaving Treasury a few months of runway with 'extraordinary measures'

  US hits debt ceiling, leaving Treasury a few months of runway with 'extraordinary measures' The Treasury Department is embarking upon “extraordinary measures” to keep the United States temporarily from defaulting after the federal debt ceiling was reinstated and immediately became binding Sunday. © Provided by Washington Examiner A two-year congressional suspension of the debt ceiling expired Sunday, making the level of federal debt, more than $28 trillion, the new ceiling. The Treasury is expected immediately to take emergency cash-conservation steps to pay incoming bills without issuing debt over the limit.

The White House expects to dodge an early-December debt cliff by sitting on a stack of infrastructure cash, Treasury Secretary Janet Yellen said Tuesday.

U.S. Treasury Secretary Janet Yellen warned Congress about the debt limit. © Chip Somodevilla/Getty Images U.S. Treasury Secretary Janet Yellen warned Congress about the debt limit.

The bipartisan infrastructure bill President Joe Biden signed into law this week will send $118 billion to the nation’s highway fund — but only once the Treasury Department pulls the trigger. By holding on to that money until mid-December, the Biden administration expects to thwart another debt limit crisis in the meantime.

Yellen told congressional leaders on Tuesday that she has “a high degree of confidence” that her department will be able to finance the government through Dec. 15. But “there are scenarios,” she wrote, that would leave the government without enough cash beyond that date.

Inflation Will Only Drop by 2022 Midterm Elections If COVID Eases: Janet Yellen

  Inflation Will Only Drop by 2022 Midterm Elections If COVID Eases: Janet Yellen After months of defense rhetoric on rising inflation, the White House is now candidly acknowledging the worsening economic issue that has cursed Biden's presidency."It's important to realize that the cause of this inflation is the pandemic," Yellen said on CBS News' Face the Nation Sunday. "The pandemic has been calling the shots for the economy and for inflation. And if we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do.

A gush of corporate tax payments come the middle of next month could make the accounting trick work, filling federal coffers enough to keep Treasury from reaching the absolute breaking point now that the nation has again exhausted its roughly $28 trillion debt limit. While the delay is unlikely to hold up any transportation projects, the bookkeeping maneuver shows how Republican intransigence continues to pinch Democrats unable to suspend the debt ceiling on their own.

Yellen concluded her letter Tuesday with a plea to leaders on Capitol Hill: “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.”

Outside forecasters have said the influx of revenue on Dec. 15 could give the Treasury enough cash to keep paying the government’s bills until late December. The Bipartisan Policy Center, which consistently forecasts the debt limit with accuracy, predicts that Treasury might even be able to stave off a debt crisis until mid-February.

Inflation Will Only Drop by 2022 Midterm Elections If COVID Eases: Janet Yellen

  Inflation Will Only Drop by 2022 Midterm Elections If COVID Eases: Janet Yellen After months of defense rhetoric on rising inflation, the White House is now candidly acknowledging the worsening economic issue that has cursed Biden's presidency."It's important to realize that the cause of this inflation is the pandemic," Yellen said on CBS News' Face the Nation Sunday. "The pandemic has been calling the shots for the economy and for inflation. And if we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do.

Senate Minority Leader Mitch McConnell has said his party won’t help Democrats avert the next debt limit cliff, after 11 GOP senators ended up voting last month to raise the nation’s borrowing limit by $480 billion. Instead, the Kentucky Republican insists that Democrats use the budget reconciliation process, which they’re using to pass Biden’s sweeping safety net bill, to act alone on the debt limit. That pathway is more time-consuming and would likely require the majority party to raise the debt limit to a specific number, further fueling Republican campaign attacks characterizing Democrats as reckless spenders.

Top Democrats on Tuesday declined to rule out using the special budget maneuver to lift the cap on the nation’s borrowing ability, as they have for the last several months. Senate Majority Leader Chuck Schumer said he wants the upper chamber to pass Biden’s social spending package by Christmas.

Yellen warns US could default soon after Dec. 15

  Yellen warns US could default soon after Dec. 15 Treasury Secretary Janet Yellen told congressional leaders Tuesday that the federal government could default on its debt soon after December 15 without action to raise the federal borrowing limit.In a Tuesday letter, Yellen said she has "a high degree of confidence" in Treasury's ability to keep the U.S. current on debt payments until midway through next month - roughly two weeks longer than her initial projection of Dec. 3.She warned,In a Tuesday letter, Yellen said she has "a high degree of confidence" in Treasury's ability to keep the U.S. current on debt payments until midway through next month - roughly two weeks longer than her initial projection of Dec. 3.

“Look, we must pass the debt limit,” the New York Democrat said. “We cannot let the full faith and credit of this country lapse, and we hope to do it in a bipartisan way.”

When asked about removing reconciliation as an option for raising the debt ceiling, Senate Budget Chair Bernie Sanders (I-Vt.) said, “We’ll look at all the options, but this country cannot fail to pay its debt.”

Along with action on the debt limit, the next government shutdown deadline could also get punted into the new year. Federal funding runs out on Dec. 3, but Republicans are blocking spending negotiations, demanding that Democrats acquiesce to a slew of conservative stipulations on how government money is spent.

Kate Davidson contributed to this report.

Pelosi says Biden doesn't have the power to cancel student loan debt, as Schumer pushes him to eliminate $50,000 per borrower .
Pelosi said Wednesday that student loan debt is "a policy discussion" and cancelation has to be "an act of Congress."The California Democrat told reporters during a press briefing that student loan debt is "a policy discussion" and that cancelation has to be "an act of Congress.

See also