Minister of Finance Janet Yellen
Janet Louise Yellen: On The Money: Yellen sounds an alarm over the national default. Yellen triggers alarms over Pelosi’s debt ceiling cliff, blaming Trump for debt and promises to raise loan limit MORE it triggers alarms for an approaching fight over the nation’s debt limit that could spark a global economic crisis if Congress fails to take action.
Yellen’s warning, delivered Wednesday to congressional leaders, that the country could default on its debt as soon as next month opens a new urgency in backstage discussions on how to raise the debt ceiling.
No clear final game is seen.
Democrats could need 10 Republican Party votes to raise the debt ceiling if Republicans get in the way. Democrats only have 50 votes in the Senate and Republican Party leaders have indicated they will not help raise the loan limit.
Including a debt ceiling hike in the budget reconciliation measure Democrats are now drafting would be a way to surround the Republican Party. Budget rules prevent a GOP hurdle.
Democratic leaders have noted that they do not want the debt ceiling to be part of that package.
“We will not put it in reconciliation,” Speaker said Nancy Pelosi
Nancy Pelosi: Night Health Care: Biden will redouble pandemic efforts. Yellen triggers alarms on the cliff of the debt ceiling. Ways and means to start marking the package.5T MORE (D-California) told reporters Wednesday.
It is also unclear whether the package will be completed in time to meet the debt deadline. Yellen said Wednesday that the limit would be breached in October.
“The time for Congress to act now is to make sure the United States does not come close to breaching some of its obligations,” said Rachel Snyderman, associate director of the Bipartisan Policy Center, a nonpartisan think tank that tracks near the debt limit. “But what worries me right now is that there are so many important priorities at stake,” he continued.
Republican lawmakers helped suspend the debt limit under the former President Trump
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But the Republican Party has promised not to vote President Biden
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The Republican Party wants to make Democrats own both the spending measures and the debt vote, with the vision that it will help Republicans regain majorities in the House and Senate in next year’s midterm elections.
Senate Minority Leader Mitch McConnell
Addison (Mitch) Mitchell McConnellYellen triggers alarms on the Capitol Police Debt Cliff to inform Congressional leaders about the January 6 riot protection. Harry Reid renews petition for abolition of filibuster. (R-Ky.) He fired last month as the struggle escalated that if Democrats were to give the green light to spending, shouldn’t they be “proud to own all the debt it requires?” And 46 Republican senators signed a sworn letter that they would not support raising the debt ceiling, leaving Democrats without votes.
McConnell spokesman Doug Andres said Wednesday that flirting with a debt default would be a “crisis” of the “Democrats’ own process.”
“Democrats control Washington now. They can increase the debt limit on their own, ”he said.
Leader of the Senate majority Charles Schumer
Chuck SchumerCongress finally gets serious about climate change The world of pressure Virginia Democrat introduces a tax credit for electric commercial vehicles MORE (DN.Y.) on Wednesday attacked Republicans during a conference call with reporters, saying opposing a debt hike would be a “horrible act” and “despicable.”
“It would be the culmination of irresponsibility for Republicans to play games to take the debt limit hostage,” he said.
Allowing the nation to fail would be unthinkable, but it is not entirely clear how Biden and Democrats will deal with the issue.
The increasingly partisan struggle comes as Congress addresses a full range of legislative issues, including government funding at the end of the month and the $ 3.5 trillion broad spending package.
Yellen tried to take his involvement in a letter to lawmakers warning that in the midst of a pandemic, which shook the world economy, “it would be particularly irresponsible to jeopardize the full faith and credit of the United States.”
The debt ceiling was restarted on Aug. 1 after the suspension included in a 2019 budget deal expired without congressional action. The Treasury Department has used “extraordinary measures” to keep the U.S. solvent since then, but they will run out next month, Yellen warned Wednesday.
“Once all available measures and available cash were exhausted, the United States of America could not meet its obligations for the first time in our history,” Yellen said.
“Given this uncertainty, the Treasury Department cannot provide a specific estimate of how long the extraordinary measures will last. However, based on the best and most recent information, the most likely outcome is that the extraordinary measures and in cash will run out during the month of October, “he continued.
The federal debt limit is a legal limit on how much debt the United States can take on to pay obligations already approved by the president and Congress for several years. Raising the ceiling does not erase or create any new debt, but gives the federal government more leeway to pay its bills.
Wall Street and the banking system have become accustomed to high-stakes debt ceiling fights in Washington.
Credit rating firm Standard & Poor’s downgraded the county’s credit rating during a 2011 debt limit clash, and fighting the 2013 debt limit probably added tens of millions of dollars to national debt through higher borrowing costs, according to a report from the Government Accountability Office.
But until the deadline is very close, it seems unlikely that the market reaction will put excessive pressure on lawmakers and the administration.
However, Synderman noted that short-term Treasury bond yields have risen in recent weeks as investors become increasingly concerned about the risk of delinquency, especially as the impact of the pandemic limits the ability of nail yourself when it can happen.
The overall dynamic of the struggle has been unfolding for months: Senate Republicans previously incorporated non-binding language into conference rules, which recommended that any increase in the debt ceiling be contracted through reforms or spending cuts.
And Democrats have warned they will not negotiate the debt ceiling, and have pointed out that Republicans had helped vote under Trump.
“Now they want to risk a recession by refusing to pay the mostly accumulated debts before Biden takes office. We will not negotiate with Republicans to convince them to do the job they were elected to do,” the senator said. . Elizabeth Warren
Elizabeth Warren Yellen triggers alarms on the cliff of the debt ceiling. Overnight Hillicon Valley – A pro-Chinese group tries to mobilize protests in the United States. Warren urges Amazon to fix the “feeding loops of misinformation” algorithm MORE (D-Mass.) He tweeted Wednesday.
Another option to increase the debt ceiling would be to include it in a short-term government funding bill that Congress must pass by the end of the month to prevent a government shutdown. But that could risk a shutdown if Republicans get too close to the deadline.
Pelosi declined to say how Democrats would raise the debt ceiling, but urged Republicans to act “responsibly.”
“We will have several options. We will make them known as well, as we slow down and move forward. But … it has to happen. Again, three times during the Trump administration, we all cooperate to overcome this and hopefully they will be responsible, ”he said.
Schumer similarly rejected it and told reporters that Democrats have “several ways” of dealing with the debt ceiling.
“Stay tuned,” he added.