Yellen Warns that the US May Default in October
US Treasury Secretary Janet Yellen warned Wednesday that the country could enter a national debt default in October if Congress does not pass an increase in the debt limit.
In a letter sent to congressional leaders, the ruler says that if Congress does not pass a debt limit increase, the department she runs will run out of money and exhaust “extraordinary” measures to keep the federal government within its legal debt limit. sometime next month.
“Once all available measures and available money are exhausted, the United States will not be able to fulfill its obligations for the first time in our history,” adds the letter from the US Treasury Secretary.
Janet Yellen wrote this letter to Democrats Nancy Pelosi and Chuck Schumer, Speaker of the House of Representatives and Senate Majority Leader, respectively, and to Republicans leading her House and Senate party, Kevin McCarthy and Mitch McConnell.
The Treasury department has taken so-called “extraordinary measures” to prevent the US from defaulting on its national debt since the federal deficit limit was reimposed on Aug. 1st.
If the Treasury runs out of ways to avoid a default without borrowing more money, the US’s inability to pay its debts could create an earthquake in the financial system, said Janet Yellen.
The government official urged lawmakers for months to raise the debt limit before it was reimposed in August, warning that a delay could “do irreparable damage to the US economy and global financial markets.”
Since then, she has called on Congress to give the Treasury the ability to pay debts already approved by previous presidents and congressmen.