Yellen Warns Congress of ‘Irreparable Harm’ if US Debt Limit Not Raised By 1 August
© AP Photo / Patrick SemanskyThis May 4, 2021 file photo shows the Treasury Building in Washington
© AP Photo / Patrick Semansky
WASHINGTON (Sputnik) - US debt will reach its allowable peak on 1 August and there will be "irreparable harm" if the limit is not raised, Treasury Secretary Janet Yellen warned Congress on Friday.
"I am writing to inform you that beginning on Sunday, August 1, 2021, the outstanding debt of the United States will be at the statutory limit", Yellen said in a letter addressed to US House Speaker Nancy Pelosi and copied to Republicans leaders in both Congress and the Senate.
Yellen’s comment comes as Republican lawmakers signaled opposition to raising the debt ceiling.
The Treasury Secretary said increasing or suspending the debt limit does not increase government spending, nor does it authorise spending for future budget proposals.
"It simply allows Treasury to pay for previously enacted expenditures. The current level of debt reflects the cumulative effect of all prior spending and tax decisions, which have been made by Administrations and Congresses of both parties over time. Failure to meet those obligations would cause irreparable harm to the US economy and the livelihoods of all Americans".
Yellen reminded lawmakers on both sides of the aisle that even the threat of failing to meet the United States’ debt obligations has caused detrimental impacts in the past, including the first-ever credit rating downgrade in US history in 2011.
"This is why no President or Treasury Secretary of either party has ever countenanced even the suggestion of a default on any obligation of the United States", she said.
On Wednesday, the bipartisan Congressional Budget Office said the US government will most likely run out of money between October and November unless the debt ceiling was raised.
The caution came after Senate Republican Minority Leader Mitch McConnell said his party will not vote for a debt ceiling hike.