Treasury Secretary Janet Yellen said Tuesday the federal government might be unable to pay its bills starting Dec. 15, pushing back a previous debt ceiling deadline and giving Congress almost two extra weeks to find a way to avoid what would be the first default in U.S. history.
Yellen, urging lawmakers to raise or suspend the federal debt limit sooner rather than later, revised her previous deadline, Dec. 3, to mid-December. She said the change is due in part to the newly enacted bipartisan infrastructure law, which allocates $118 billion to the Highway Trust Fund.
"While I have a high degree of confidence that Treasury will be able to finance the U.S. 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 U.S. government beyond this date," she wrote in a letter to congressional leaders. "To ensure the full faith and credit of the United States, it is critical that Congress raise or suspend the debt limit as soon as possible."
Congress passed a bill last month to extend the debt limit through Dec. 3. The House voted 219-206 along party lines, and the Senate narrowly cleared the 60-vote threshold to pass the measure with some help from Republicans.
A path to resolving the debt standoff looks even more precarious this time around, even with the 12-day extension. Senate Minority Leader Mitch McConnell, R-Ky., warned after the vote last month that no Republican senators would work with Democrats on “any future effort to mitigate the consequences of Democratic mismanagement.”
“Your lieutenants on Capitol Hill now have the time they claimed they lacked to address the debt ceiling through standalone reconciliation, and all the tools to do it. They cannot invent another crisis and ask for my help,” McConnell wrote in a letter to President Joe Biden last month.
Yellen said last month that failing to raise the debt ceiling would "probably cause a recession." She said inaction by Congress would put Social Security payments at risk for 50 million people, while paychecks for members of the military would be on hold. Child tax credit payments to 30 million families also would be in jeopardy, Yellen said at the time.