Janet Yellen, U.S. Treasury Secretary, testifies before Senate Appropriations Subcommittee on Financial Services, about the FY22 Treasury budget request on Capitol Hill, Washington, DC, June 23, 20,21.
Janet Yellen, Treasury Secretary, told Nancy Pelosi Tuesday that Congress has less than three weeks to resolve the looming debt ceiling issue and prevent an economic disaster.
In a letter, she stated that Treasury was likely to exhaust its extraordinary actions if Congress does not act to raise or suspend debt limits by October 18. "At that time, we expect Treasury to be left with very few resources that would be depleted rapidly."
Yellen will be testifying before the Senate on Tuesday morning. In a separate statement, Yellen warned that the failure to raise or suspend the debt limit could lead to the United States' first ever default and have serious consequences for the U.S. Economy.
"It is crucial that Congress quickly addresses the debt limit. In her remarks to Senate Banking Committee, she stated that America would default for first time in its history if it didn't. "The United States' full faith and credit would be affected, and the country would likely experience a financial crisis or economic recession.
Economists must rely on forecasts and guesswork to predict the economic consequences of a default. The U.S. has never defaulted upon its debts before. However, economists agree that a default on U.S. debt would cause financial chaos and a market sell-off.
Yellen's letter addressed to Pelosi (D-Calif.) is the latest in a series of communications between the Treasury Secretary and congressional leadership as the U.S. closes to missing a payment for its debt holders. The House speaker's spokesperson did not respond immediately to a request for comment.
In recent weeks, Senator Major Leader Chuck Schumer (D-N.Y.) and Pelosi have called on Republicans to suspend the debt ceiling as a bipartisan obligation.
"Now, while Minority Leaders McCarthy & McConnell welcome a catastrophe they both know is coming," Pelosi's office stated last week, before Yellen's latest letters.
Monday's blockade by Senate Republicans was due to stop a bill that would have funded the government and suspended the U.S. borrowing limit. The House bill was rejected by the GOP because it contained a provision to suspend debt ceiling. Republicans believe this should be left to the Democrats.
