Treasury Secretary Janet Yellen on Friday turned up the pressure on Congress to tackle the debt limit, saying the pandemic has scrambled accounting tricks the government has used in the past to avoid default on its debt.
A 2019 agreement to suspend the debt limit expires on Aug. 1. and Yellen told bipartisan leaders of the House and Senate that she will have to take “extraordinary measures” to prevent a default.
“Treasury is not able to provide a specific estimate of how long extraordinary measures will last,” Yellen said in her letter.
She said trouble could start as soon as lawmakers return from their summer break in mid-September.
“For example, on October 1 alone, cash and extraordinary measures are expected to decrease by about $150 billion due to large mandatory payments, including a Department of Defense-related retirement and health care investment,” she said.
White House spokesman Jen Psaki said Friday that President Joe Biden expects Congress to act in a bipartisan manner to raise the debt limit.
That is a pointed barb aimed at Senate Minority Leader Mitch McConnell, R-Ky., who said he believes all Republicans will vote against renewing Washington’s ability to borrow money.
Senate Majority Leader Charles Schumer called McConnell’s statement “shameless and cynical.”
The Congressional Budget Office estimated earlier this week that the government could run out of cash to pay its bills as soon as October.