WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen on Monday again urged Congress to raise the U.S. debt limit through bipartisan action as more Republicans balked at the prospect of raising the federal government’s borrowing capability.
Yellen, in another notice to U.S. lawmakers, warned of economic harm if the debt ceiling is not raised or suspended before the nation’s borrowing capability is exhausted in October.
Failure to increase or suspend the statutory debt limit – now at $28.5 trillion – could trigger another federal government shutdown or a debt default.
Congress should act “as it has in the past to protect the full faith and credit of the United States,” Yellen wrote, calling it “a shared responsibility.”
“Failure to meet those obligations would cause irreparable harm to the U.S. economy and the livelihoods of all Americans,” she added.
Yellen, who earlier pressed U.S. lawmakers to act in a July letter and a June hearing, said the majority of the debt accrued prior to the Biden administration and that Republicans and Democrats had worked together multiple times in previous years to address the borrowing issue.
But Republicans, who lost control of the White House and the Senate after last November’s election, have denounced U.S. President Joe Biden and his fellow Democrats’ massive spending in the wake of the COVID-19 pandemic as well as forthcoming plans to expand social benefits. Some have also balked at the cost of the bipartisan infrastructure bill, which is expected to pass later on Monday night with a number of Republican votes.
Senate Republican Leader Mitch McConnell last week said Democrats, who narrowly control the chamber, should address the debt limit themselves.
“The Democrats are able to do that with their own votes since they added $1.9 trillion to the debt this year and they’re talking about adding another $3.5 trillion in this tax and spend package,” Republican U.S. Senator Rob Portman echoed on Monday in a CNBC interview.
“That’s something … they can do on their own and should because they’re the one who have pushed this debt to the point where it is really getting dangerously high,” Portman added, saying Democrats could leverage a process known as reconciliation to act without Republican votes.
The national debt ballooned by almost 40% under Trump to nearly $28 trillion, fueled by the passage of tax cuts in 2017 and a flood of spending to counter the economic hit from the coronavirus pandemic last year.
Fellow Republican Rick Scott told “Fox News Sunday” that lawmakers agreed at a caucus meeting not to support raising the debt ceiling “without structural change” but gave no other details. “Let’s live within our means, quit running up the debt,” he added.
Yellen has called Oct. 1 a critical date for U.S. government cash flows, because of some $150 billion in payments due on the first day of the 2022 fiscal year, including some investments in military pension programs.
Meanwhile, the Treasury Department has already announced measures such as suspending investments in employee health benefits funds to preserve the government’s borrowing authority.
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