Funds for the federal government are running dry, according to the United States Treasury Secretary. As multiple news outlets reported, Janet Yellen reached out to Congress to notify them of the government’s current financial state. In the letter, she urged them to raise or suspend the debt limit within the next three weeks, warning that the government will run out of money if nothing is done.
“It is imperative that Congress swiftly addresses the debt limit,” she wrote to the Senate Banking Committee. “If it does not, America would default for the first time in history. The full faith and credit of the United States would be impaired, and our country would likely face a financial crisis and economic recession.”
In a letter to House Speaker Nancy Pelosi, the treasury secretary specifically noted that the government’s funds may be depleted by Oct. 18 if Congress fails to act on the debt ceiling.
“We now estimate that Treasury is likely to exhaust its extraordinary measures if Congress has not acted to raise or suspend the debt limit by October 18,” she wrote. “At that point, we expect Treasury would be left with very limited resources that would be depleted quickly.” The deadline, she added, is only an estimate based on the government’s average cash flow of $50 billion per day over the past year.
“It is important to remember that estimates regarding how long our remaining extraordinary measures and cash may last can unpredictably shift forward or backward,” Yellen continued. “This uncertainty underscores the critical importance of not waiting to raise or suspend the debt limit. The full faith and credit of the United States should put at risk.”
Yellen’s request to raise or suspend the debt ceiling does not permit new federal spending, but it allows the Treasury Department to cover existing debt from the Trump and Biden administrations. Democrats have been pushing to pass a bill that would suspend the government’s debt limit, but the Senate Republicans recently blocked the legislation. Per the treasury secretary, this may potentially result in “a financial crisis and a calamity” in the U.S.