US will default on national debt by October, warns Treasury secretary

Secretary of the Treasury Janet Yellen has warned that the United States is on track to default on the national debt by October if the government does not do anything to raise the debt limit.

On Wednesday, Sept. 8, Yellen sent a letter addressed to House Speaker Nancy Pelosi, House Minority Leader Kevin McCarthy, Senate Majority Leader Charles Schumer and Senate Minority Leader Mitch McConnell.

In the letter, Yellen warned that the Department of the Treasury is running out of money. She added that the department was also running out of “extraordinary” measures it can use to keep the federal government within its legal borrowing limit. Without any action from Congress or the White House, the country will reach this limit by next month.

The so-called extraordinary measures Yellen is using have been in place since the federal debt limit was reimposed on Aug. 1 after being suspended for two years in July 2019.

The debt limit is the amount of money Congress allows the Treasury Department to borrow to keep the federal government running. When it was suspended, the public debt stood at around $22 trillion. When the limit was reinstated, it was reset to $28.4 trillion, which was the country’s current existing level of debt.

“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 warned.

Yellen was unable to say specifically when in October the Treasury Department would no longer be able to keep the federal government funded.

Without action from Congress or the White House, the U.S. could end up being unable to pay off its debts. This would send debilitating shockwaves through the world’s fragile financial systems. (Related: CORRUPT: Treasury Secretary Janet Yellen taking massive bribes and payoffs disguised as “speaking fees.”)

The Treasury Secretary is demanding that Congress act immediately to deal with the debt.

“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,” she claimed.

Yellen even tried to plead with Congress by using the Wuhan coronavirus (COVID-19) pandemic.

“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,” she said.

Democrats still unsure how to pass debt limit increase

Yellen pointed out that some recent measures proposed to address the debt limit have enjoyed broad support among both Republicans and Democrats alike.

But GOP leaders have said they will refuse to support any effort from the Democratic Party to deal with the debt limit by attaching it as a provision to an emergency budget bill that Congress will need to pass before the start of the budget year on Oct. 1. Such emergency legislation is necessary to avoid a government shutdown.

Republicans are daring Democrats to attach a debt limit increase to its $3.5 trillion infrastructure plan. The Democrats are hoping to pass this plan in a way that would bypass the Senate filibuster. This way, the Democrats can pass it without any Republican votes.

The Democrats are hoping to pass the infrastructure plan through a process known as “budget reconciliation.” This process does not require the Democrats to get 60 votes from the Senate to bypass the filibuster. This means they can pass it without any support from Senate Republicans.

But Pelosi insisted on Wednesday that the Democrats will not use the reconciliation measure to pass an increase in the debt limit.

She tried to appeal to the Republicans by saying that the Democrats supported lifting the borrowing limit during former President Donald Trump’s term “because it’s the responsible thing to do.”

“I would hope that the Republicans would act in a similarly responsible way,” she added.

Learn more about how close the United States is to defaulting on its debt by reading the latest articles at DebtCollapse.com.

Sources include:

TheHill.com

ABCNews.go.com