Janet Yellen has a warning for Congress: raise the debt ceiling or the government will run out of cash soon.
The Treasury Secretary Wednesday told lawmakers that Uncle Sam’s coffers will likely run dry by the end of October, forcing a government shutdown that could be particularly devastating as the economy struggles to recover from the COVID pandemic.
“A delay … would likely cause irreparable damage to the U.S. economy and global financial markets,” the nation’s top bean counter wrote.
“At a time when (Americans) are still suffering from the effects of the ongoing global pandemic, it would be particularly irresponsible to put the full faith and credit of the United States at risk,” Yellen added.
The dire warning comes as leaders of both parties and President Biden are locked in a high-stakes game of political chicken over the debt ceiling and the proposed twin $4.5 trillion infrastructure spending packages that are the White House’s top priority.
Democrats say raising the debt ceiling should be a no-brainer for both parties. They have underscored the point by linking it to a widely popular measure providing emergency aid to areas slammed by Hurricane Ida and temporary assistance for America’s airlifted Afghan allies.
But Republicans say they won’t go along with raising the debt ceiling unless Democrats give up their effort to skirt their filibuster power and pass a massive $3.5 trillion infrastructure plan to go along with a $1.2 trillion bipartisan plan that some GOP lawmakers back.
Senate Minority Leader Mitch McConnell (R-Ky.) recently told Democrats that if they want to enact a budget-busting big spending bill without GOP support they should own it by raising the debt ceiling in the same package.
House Speaker Nancy Pelosi rejected that idea Wednesday when she vowed to force lawmakers to vote separately on raising the debt ceiling, which would effectively amount to a vote on avoiding a painful government shutdown in the middle of a global pandemic.
The war of words sets up a looming political standoff that adds an extra layer of drama to the fight over the pricey infrastructure bills that Biden has made the No. 1 priority for his young presidency.
Pelosi set a Sept. 27 deadline for a vote on the bipartisan infrastructure deal as part of a deal with a small group of moderate Democratic House lawmakers, a move that bought a bit more time to flesh out the bigger plan.
Progressives, on the other hand, are threatening to vote against the bipartisan infrastructure deal unless all 50 Democrats in the evenly divided Senate vote to pass the much bigger deal, which includes big bucks to combat climate change but also expensive goodies like free community college and pre-school and expanding Medicare.
Sen. Joe Manchin (D-W.V.) and other moderates say they won’t support everything that’s in the $3.5 trillion plan and want tax hikes to fund them, adding another big headache to the equation.
Despite the internal divisions, Democrats still hold both houses of Congress and the White House, so the smart money says they will figure out a way to pass the infrastructure plans and answer Yellen’s pleas to prevent a government shutdown. But it’s going to be a rocky road getting there.
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