Yellen again warns Congress of US debt limit as Republicans balk

WASHINGTON, Aug.9 (Reuters) – U.S. Treasury Secretary Janet Yellen on Monday again urged Congress to raise the U.S. debt ceiling through bipartisan action as more Republicans balked at the idea of ” increase the federal government’s borrowing capacity.

Yellen, in another advisory to U.S. lawmakers, warned of the economic damage if the debt ceiling was not raised or suspended before the country’s borrowing capacity was exhausted in October.

Failure to raise or suspend the legal debt limit – now at $ 28.5 trillion – could trigger another federal government shutdown or default.

Congress should act “as it has done in the past to protect the full confidence and credit of the United States,” Yellen wrote, calling it a “shared responsibility.”

“Failure to meet these obligations would cause irreparable damage to the US economy and the livelihoods of all Americans,” she added.

Yellen, who previously urged U.S. lawmakers to act in a July letter and a June hearing, said the majority of the debt was piling up before the Biden administration and Republicans and Democrats worked together to several times in previous years to resolve the borrowing problem.

But Republicans, who lost control of the White House and Senate after last November’s election, denounced the massive spending by US President Joe Biden and his fellow Democrats in the wake of the COVID-19 pandemic as well as future plans to expand social benefits. Some have also hesitated over the price of the bipartisan infrastructure bill, which is expected to pass later Monday evening with a number of Republican votes.

Republican Senate Leader Mitch McConnell said last week that Democrats, who tightly control the chamber, should tackle the debt limit themselves. Read more

“Democrats are able to do this with their own votes since they added $ 1.9 trillion to debt this year and they talk about adding another $ 3.5 trillion to this tax and spending package. Republican Senator Rob Portman echoed Monday in a CNBC interview.

“It’s something (…) to act without Republican votes.

The national debt swelled nearly 40% under Trump to nearly $ 28 trillion, fueled by the passage of tax cuts in 2017 and a flood of spending to counter the economic blow from the coronavirus pandemic. last year.

His Republican colleague Rick Scott told “Fox News Sunday” that lawmakers agreed at a caucus meeting not to support raising the debt ceiling “without structural change,” but gave no further details. . “Let’s live within our means, let’s stop getting into debt,” he added.

Yellen called October 1 a critical date for U.S. government cash flow, due to some $ 150 billion in payments due on the first day of fiscal 2022, including some investments in military retirement programs.

Meanwhile, the Treasury Department has already announced measures such as suspending investment in employee health benefit funds to preserve the government’s borrowing power. Read more

Reporting by Susan Heavey; additional reports by David Lawder; Editing by Chizu Nomiyama

Our Standards: The Thomson Reuters Trust Principles.

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