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Yellen: US on track to default on national debt in October
Posted on 9/8/21 at 11:27 am
Posted on 9/8/21 at 11:27 am
Treasury Secretary Janet Yellen on Wednesday warned congressional leaders that the U.S. is on track to default on the national debt in October if the White House and Congress are unable to raise the debt limit.
In a Wednesday letter, Yellen said that the Treasury Department would likely run out of cash and exhaust “extraordinary” measures to keep the federal government within its legal borrowing limit at some point next month.
"Once all available measures and cash on hand are fully exhausted, the United States of America would be unable to meet its obligations for the first time in our history," Yellen said.
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“Given this uncertainty, the Treasury Department is not able to provide a specific estimate of how long the extraordinary measures will last. However, based on our best and most recent information, the most likely outcome is that cash and extraordinary measures will be exhausted during the month of October,” she continued.
Yellen wrote the letter to Speaker Nancy Pelosi (D-Calif.), House Minority Leader Kevin McCarthy (R-Calif.), Senate Majority Leader Charles Schumer (D-N.Y.) and Senate Minority Leader Mitch McConnell (R-Ky.).
The Treasury Department has taken so-called extraordinary measures to prevent the U.S. from defaulting on the national debt since the federal debt limit was reimposed on Aug. 1. If the Treasury Department runs out of ways to stave off a default without borrowing more money, the inability of the U.S. to pay its debts could send debilitating shockwaves through the financial system.
Yellen urged lawmakers for months to raise the debt limit before it was reimposed in August, warning that a delay could "cause irreparable damage to the U.S. economy and global financial markets."
She has since pleaded with Congress to give Treasury the ability to pay debts already approved by previous presidents and congressional majorities.
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"Waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States," Yellen wrote.
"At a time when American families, communities, and businesses are still suffering from the effects of the ongoing global pandemic, it would be particularly irresponsible to put the full faith and credit of the United States at risk."
Even so, Democrats and Republicans are locked in a stalemate over who bears responsibility for protecting the full faith and credit of the U.S.
The White House and Democratic leaders are planning to tie a debt limit increase to another must-pass government funding bill, daring Republicans to trigger both a government shutdown and a default by opposing the measure. LINK
In a Wednesday letter, Yellen said that the Treasury Department would likely run out of cash and exhaust “extraordinary” measures to keep the federal government within its legal borrowing limit at some point next month.
"Once all available measures and cash on hand are fully exhausted, the United States of America would be unable to meet its obligations for the first time in our history," Yellen said.
ADVERTISEMENT
“Given this uncertainty, the Treasury Department is not able to provide a specific estimate of how long the extraordinary measures will last. However, based on our best and most recent information, the most likely outcome is that cash and extraordinary measures will be exhausted during the month of October,” she continued.
Yellen wrote the letter to Speaker Nancy Pelosi (D-Calif.), House Minority Leader Kevin McCarthy (R-Calif.), Senate Majority Leader Charles Schumer (D-N.Y.) and Senate Minority Leader Mitch McConnell (R-Ky.).
The Treasury Department has taken so-called extraordinary measures to prevent the U.S. from defaulting on the national debt since the federal debt limit was reimposed on Aug. 1. If the Treasury Department runs out of ways to stave off a default without borrowing more money, the inability of the U.S. to pay its debts could send debilitating shockwaves through the financial system.
Yellen urged lawmakers for months to raise the debt limit before it was reimposed in August, warning that a delay could "cause irreparable damage to the U.S. economy and global financial markets."
She has since pleaded with Congress to give Treasury the ability to pay debts already approved by previous presidents and congressional majorities.
ADVERTISEMENT
"Waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States," Yellen wrote.
"At a time when American families, communities, and businesses are still suffering from the effects of the ongoing global pandemic, it would be particularly irresponsible to put the full faith and credit of the United States at risk."
Even so, Democrats and Republicans are locked in a stalemate over who bears responsibility for protecting the full faith and credit of the U.S.
The White House and Democratic leaders are planning to tie a debt limit increase to another must-pass government funding bill, daring Republicans to trigger both a government shutdown and a default by opposing the measure. LINK
Posted on 9/8/21 at 11:28 am to Jbird
I thought that they voted a few years back to automatically raise the debt limit as needed.
Why would they be playing chicken with the GOP suddenly on it?
Why would they be playing chicken with the GOP suddenly on it?
Posted on 9/8/21 at 11:28 am to Jbird
frick shutting it down... burn it down.
Posted on 9/8/21 at 11:29 am to Jbird
This is why Kam-allovermyface mentioned people need to buy Christmas gifts now
Posted on 9/8/21 at 11:30 am to teke184
quote:
federal debt limit was reimposed on Aug. 1
Posted on 9/8/21 at 11:30 am to Jbird
The solution to not being able to pay your existing debt is to have more debt?
Posted on 9/8/21 at 11:31 am to Jbird
quote:
federal debt limit was reimposed on Aug. 1
Why now? It's been suspended for years.
Was it done to get us through the 2020 elections? Or is this because of something the Dems did?
Posted on 9/8/21 at 11:32 am to Figgy
quote:
The solution to not being able to pay your existing debt is to have more debt?
Taking out credit card loans to pay off other loans is a time honored tradition by the stupid and desperate.
Posted on 9/8/21 at 11:33 am to Jbird
How long can they keep doing this???? Eventually, the SHTF scenario unfolds.
Posted on 9/8/21 at 11:34 am to elcid
quote:
How long can they keep doing this???? Eventually, the SHTF scenario unfolds.
Pretty sure the Fed is expecting it soon, hence why they aren't publishing numbers for the upcoming quarter.
Can't blame Biden for it if the problem is "unexpected".
Posted on 9/8/21 at 11:36 am to Jbird
We're about to default! We need to issue more bonds ASAP to fix it!
Posted on 9/8/21 at 11:37 am to Jbird
The obvious answer is allow ourselves to go further into debt and have the Federal Reserve buy that debt with printed money
it’s a flawless system
it’s a flawless system
Posted on 9/8/21 at 11:39 am to Jbird
Why have a debt limit at this point?
Posted on 9/8/21 at 11:41 am to elcid
quote:
How long can they keep doing this???? Eventually, the SHTF scenario unfolds.
well eventually the Treasury will be insolvent or we will inflate the dollar into the ground
I don’t see another way out, because Lord knows fiscal conservatism is long dead. And even if it wasn’t raising interest rates or tapering security buys by the Fed would absolutely tank our bloated markets. Regardless, we don’t want to pay higher interest rates on our exponentially increasing debt so easy money is just the way of the land forever more now.
From where I stand the SHTF scenario is already inevitable. The only way to avoid it within this paradigm of MMT is for inflation to be slow enough to not cause a panic, but we need that inflation to help pay off our debt which is exponentially increasing. You do the math.
This post was edited on 9/8/21 at 12:18 pm
Posted on 9/8/21 at 11:41 am to Jbird
Build Back Better!
By Increasing The Debt To New Records!
Can’t tell you how many times I remember my dad telling my mom “honey, can you run up another huge bill please I’m trying to get this family back on sound financial footing!”
By Increasing The Debt To New Records!
Can’t tell you how many times I remember my dad telling my mom “honey, can you run up another huge bill please I’m trying to get this family back on sound financial footing!”
Posted on 9/8/21 at 11:42 am to Jbird
First thought…. It’s not the US that is on track to default but the US “Government”. I contend that 90% of citizens want the government to spend within a budgetary limits
These bastards spend like drunken sailors and then hold citizens hostage with these debt thresholds to increase their spending.
Shameful…. Fck them and everything they represent
These bastards spend like drunken sailors and then hold citizens hostage with these debt thresholds to increase their spending.
Shameful…. Fck them and everything they represent
Posted on 9/8/21 at 11:45 am to Jbird
It's time to R-A-I-S-E that debt ceiling. It can't wait!
This post was edited on 9/8/21 at 11:47 am
Posted on 9/8/21 at 12:03 pm to Jbird
Nope. Do not extend the debt limit. What is the point of a debt limit if they keep extending the limit? Make them mop up the mess they have made. Hell, garnish the pay of every politician.
This post was edited on 9/8/21 at 12:04 pm
Posted on 9/8/21 at 12:05 pm to tarzana
It’s like the late great Lionel Ritchie once said “O what a feelin, I’m dancing on the debt ceiling”
Posted on 9/8/21 at 12:06 pm to Jbird
She is telling that to the people that just voted for a 3.5 TRILLION dollar bill, and who are discussing a 5 TRILLION dollar bill. Does she think that they care about that?? Their solution will be to just print more money.
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