US Treasury Secretary Janet Yellen has warned Congress against the risk of fiscal default if the federal debt ceiling is not adjusted by December 15. Yellen said state coffers may not have enough money to pay off creditors after that date. In this case, the risk of default would become concrete, bringing the country into a recession phase. Yellen asked Congress to quickly raise the spending cap or lift it.
There is time until December 15th
Last October, Democrats and Republicans agreed on a $ 480 billion interim hike that would keep the government operational until December 3. Yellen, as communicated in a letter to the speaker of the House Nancy Pelosi, has extended to December 15 the date by which the Treasury foresees that the administration could “be left with insufficient resources to continue financing the operations”. It is “crucial”, the secretary warned, that Congress raises or suspends the debt ceiling as soon as possible to avoid its first default. The postponement of the date gives the parties more time for possible negotiations.
McConnell: “A way will be found to avoid the default”
The leader of the Republicans in the Senate, Mitch McConnell, replied to the invitation of the Treasury secretary: “We will find a way to avoid default, as we always have”. McConnell asked the Democrats to channel the money under the Biden plan on Welfare and climate, the so-called ‘Reconciliation Bill’, still awaiting final approval by Congress, into debt relief.