US Treasury Could Run Out of Cash by December 15, Yellen Warns
The Debt

US Treasury Could Run Out of Cash by December 15, Yellen Warns

REUTERS/Jonathan Ernst

Treasury Secretary Janet Yellen said Tuesday that the federal government could be unable to meet all of its financial obligations if lawmakers fail to raise or suspend the debt ceiling by December 15.

The new deadline gives Congress a little more breathing room than the December 3 deadline Yellen had set previously. The Treasury secretary said the new deadline reflects in part the need to transfer $118 billion to the Highway Trust Fund, as required by the bipartisan infrastructure bill Biden signed into law on Monday.

“While I have a high degree of confidence that Treasury will be able to finance the US government through December 15 and complete the Highway Trust Fund investment, there are scenarios in which Treasury would be left with insufficient remaining resources to continue to finance the operations of the US government beyond this date,” Yellen wrote in a letter to Congressional leaders. She encouraged lawmakers to address the debt limit “as soon as possible.”

Another showdown looms: Republicans say they will not participate in raising the debt limit, insisting that Democrats can and should do it on their own through the budget reconciliation process, which requires only a simple majority in both houses of Congress. But Democrats have indicated that they don’t want to go that route and are calling on Republicans to help out.

“We must pass the debt limit,” Senate Majority Leader Charles Schumer (D-NY) said Tuesday. “We are focusing on getting this done in a bipartisan way.”

After vowing earlier this year not to help, Republicans changed tactics as the previous deadline approached in October and agreed not to delay a Democratic vote in the Senate. Some Democrats think that Republicans will abandon their hardline stance once again as the December deadline approaches and allow Democrats to vote on the issue.

“I think Republicans have now set the precedent that they understand they have an obligation to at least allow us to increase the debt limit with Democratic votes,” said Sen. Chris Murphy (D-Conn.) “I expect that we’ll reach the same place.”

But Republicans show no signs of backing off their position. “I write to inform you that I will not provide such assistance again if your all-Democrat government drifts into another avoidable crisis,” Senate Minority Leader Mitch McConnell (R-KY) wrote in a letter to President Biden after the most recent showdown on the issue.

Senate Minority Whip John Thune (R-SD) said he expects the upcoming confrontation to play out differently than the last one, and advised Democrats to start planning a new strategy. “The sooner they get started on that, the better,” he said.