Treasury Secretary Janet Yellen asked Congress on Wednesday to raise or suspend the federal debt limit as soon as possible, warning that if lawmakers do not act, the United States could face a serious risk of default in August.
“I believe that defaulting on the national debt should be considered unthinkable. Failure to raise the debt ceiling would have absolutely catastrophic economic consequences,” Yellen told a Senate appropriations subcommittee.
The secretary added that to avoid uncertainty in financial markets, Congress should pass new legislation on the debt limit, allowing the Treasury Department to continue borrowing before the latest suspension expires on July 31.
In the past, the Treasury avoided potential default for several months by employing extraordinary measures such as suspending contributions to government employee pension funds, but spending on COVID-19 relief programs has added uncertainty. to government cash flows.
These measures could be exhausted in August, when Congress takes its traditional summer recess, Yellen said.
With information from Reuters
