Tacking on 12 additional days after previously announcing Congress would need to suspend or raise the country’s debt limit by Dec. 3, Yellen wrote in a Tuesday evening letter to House Speaker Nancy Pelosi that Dec. 15 is the new target.
“While I have a high degree of confidence that the Treasury will be able to finance the U.S. government through December 15 … there are scenarios in which the Treasury would be left with insufficient remaining resources to continue to finance the operations of the U.S. government beyond this date,” she told Pelosi.
“It is imperative that Congress act to increase or suspend the debt limit in a way that provides longer-term certainty that the government will satisfy all its obligations,” Yellen wrote to Pelosi, a California Democrat.
Yellen, who insisted she would continue to update Congress as more information becomes available, added that it is “critical” that lawmakers work to raise or suspend the debt limit to ensure the full faith and credit of the United States.
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Congress has only a few weeks before the U.S. could default on its obligations — something that has never happened and a prospect that economists warn could spawn chaos throughout the financial system.
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While the Dec. 3 deadline is looming, Democrats are refusing to go it alone and are insisting Republicans provide the votes to pass a debt limit increase that would last through 2022.
Republicans have said they don’t want to help raise the debt ceiling with Democrats. Senate Minority Leader Mitch McConnell, a Kentucky Republican, agreed to a short-term extension in October. He hoped it would give Democrats time to include a longer-term increase in their planned reconciliation package.
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The reconciliation package can pass with just a simple majority and thus does not actually require GOP votes. Still, Democrats are pushing Republicans to join with them, as has been done in the past, to help the country avoid defaulting on its obligations.
Republicans say they won’t provide the votes to increase the debt ceiling because Democrats are acting recklessly by moving to jam through a massive social welfare spending package that is likely to cost around $2 trillion.
Republicans say Democratic spending is fueling inflation and hurting the economy.
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“The truth is, working families are being crushed by the crises created by the Biden Administration,” said Rep. Jason Smith of Missouri, the top Republican on the House Budget Committee. “Republicans will not co-sign a loan for an agenda that only makes them worse.”
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Democrats say the debt accrued thanks to Trump-era tax cuts that reduced revenue to the Treasury and COVID-19 relief packages both Republicans and Democrats voted to pass in Congress. Pelosi said Democrats are trying to “have bipartisanship” on a long-term increase and warned that if the deadline isn’t met, it will have a devastating impact on the economy.
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