Politics Janet Yellen to Take 'Extraordinary Measures' to Prevent U.S. From Debt Default

09:21  25 july  2021
09:21  25 july  2021 Source:   newsweek.com

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Treasury Secretary Janet Yellen said she will take "extraordinary measures" to prevent the U.S. from a default on the national debt unless Congress acts to suspend or increase the debt limit, she warned Congressional leaders in a letter Friday.

Janet Yellen wearing a blue hat: U.S. Treasury Secretary Janet Yellen said the Treasury is to take © Andreas Solaro/AFP via Getty Images U.S. Treasury Secretary Janet Yellen said the Treasury is to take "extraordinary measures" to prevent the country from a default on the national debt. In this photo, Yellen gestures as she addresses a press conference during the G20 finance ministers and central bankers meeting in Venice on July 11, 2021.

Yellen said the U.S.' "outstanding debt" will be at its statutory limit on August 1 and additional measures will be taken if the debt limit is not suspended or increased by August 2. The Treasury announced a suspension of the sale of state and local government securities, that increases the federal government's debt level, according to the Associated Press, and will take effect on July 30. For two years, the debt limit has been suspended.

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If Congress does not agree to suspend or heighten the debt limit on August 2, the "Treasury will need to start taking certain additional extraordinary measures in order to prevent the United States from defaulting on its obligations," Yellen said.

"Increasing or suspending the debt limit does not increase government spending, nor does it authorize spending for future budget proposals; it simply allows Treasury to pay for previously enacted expenditures," she added.

Yellen noted the U.S.' current debt level is a result of spending and tax decisions made "by Administrations and Congresses of both parties over time."

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Senate braces for a nasty debt ceiling fight

  Senate braces for a nasty debt ceiling fight Republicans are digging in on the federal debt limit, warning Democrats that it will be up to them to avoid a default as President Biden pushes for trillions more in spending.GOP senators are taking a firm line as Democrats plot a path for their $3.5 trillion spending measure, which the party plans to pass with budget reconciliation rules that will prevent the GOP from blocking it with a filibuster.Given those plans, GOP senators say they won't lift a finger to help Democrats raise the debt ceiling."I'm not sure why there's much of an incentive right now given what the Democrats are doing, trying to run roughshod over the minority in the Senate, to help them," said Sen.

For more reporting from the Associated Press, see below.

Yellen said that her actions would buy time until Congress can pass legislation to either raise the debt limit or suspend the limit again for a period of time.

The debt limit will go back into effect on July 31.

The sale of state and local government securities is used by some local jurisdictions to meet some of their financing needs.

Senate Republican Leader Mitch McConnell said earlier this week that he believes all Republicans will vote against raising or suspending the debt limit, which prompted Senate Majority Leader Chuck Schumer to call the comments "shameless, cynical and totally political."

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The United States debt limit suspension ends Saturday .
The Treasury should have enough cash to pay the country's obligations into the fall, experts estimate.The debt ceiling is the amount the Treasury can borrow on behalf of the public. Raising or suspending that borrowing limit does not dictate how much money the government spends, but allows the U.S. to pay what has already been approved. The debt ceiling was suspended in 2019 under President Donald Trump.

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