Yellen says U.S. could hit debt limit on Dec. 15, giving Congress more time to strike deal

Janet Yellen, US Treasury Secretary, speaks during an interview at the annual meeting of the National Association for Business Economics (NABE) in Arlington, Virginia, US, on Tuesday, September 28, 2021.

Amanda Andrade-Rhodes | Bloomberg | Getty Images

Treasury Secretary Janet Yellen on Tuesday told lawmakers that she now estimates that the United States will reach its debt limit on December 15, about two weeks later than its initial forecast.

In a letter to House Speaker Nancy Pelosi, D-Calif., Yellen explained that her revised estimate is a result of President Joe Biden’s enacting a $1 trillion infrastructure plan earlier this week.

“Yesterday, the President signed the Infrastructure and Jobs Investment Act, which allocates $118 billion to the Highway Trust,” she wrote. “These funds must be transferred to the Highway Trust within one month after the enactment of the legislation, and the transfer will be completed on December 15.”

“While I have a high degree of confidence that the Treasury will be able to fund the US Government through December 15 and complete the Highway Trust Fund investment, there are scenarios in which the Treasury is left with insufficient residual resources to continue financing operations after this date.” “.

These additional 12 days will give Congress more time to strike a deal on how to raise or suspend the debt ceiling. If lawmakers fail to do so before the so-called payment deadline, the US government will default for the first time ever.

Yellen said she expected a default would trigger a recession and threaten the dollar’s role as the world’s reserve currency.

This is urgent news. Check again for updates.

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