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Politics Yellen triggers alarm bells over debt ceiling cliff

02:26  09 september  2021
02:26  09 september  2021 Source:   thehill.com

Dems won't blink in debt showdown as painful September looms

  Dems won't blink in debt showdown as painful September looms Senate Republicans are digging in. The majority party still plans to burn its most expedient ticket out of the fiscal mess.Senate Republicans are digging in deeper and deeper in their resistance to raising the nation's borrowing limit, with 46 of them vowing to oppose an increase this fall that will need at least 10 Republican votes. Yet Democrats still plan to burn their most expedient ticket out of the debt mess, with no intention to shift course and pass an increase along party lines.

A delay on raising the debt ceiling would not only make the federal government look irresponsible – it “would likely cause irreparable damage to the US economy and global financial markets,” Yellen wrote, noting that “business and consumer confidence” were at stake, along with the country’s credit rating. As of Wednesday, the US’ national debt stands at upwards of .8 trillion, compared to a meager .85 trillion in tax revenues. Despite the desperate pageantry that accompanies the maneuver each time, however, the country is no stranger to raising the debt ceiling .

U.S. Treasury Secretary Janet Yellen on Wednesday again urged Congress to tackle the nation's debt ceiling , saying it was unclear how long Treasury's efforts to temporarily finance the U.S. government would last and citing ongoing economic worries over the pandemic. Democrats and Republicans are staring down a historic fiscal crisis if they do not act, which could trigger a catastrophic default on debt repayment obligations or a temporary shutdown of some federal operations. Leaders of the Democratic-led Senate and House of Representatives are expected to force votes to lift the .4 trillion debt limit

Treasury Secretary Janet Yellen is setting off alarm bells over a looming brawl over the nation's borrowing limit that could spark a global economic crisis if Congress fails to take action.

a person sitting at a table: Treasury Secretary Janet Yellen answers questions during a Senate Appropriations Subcommittee hearing to examine the FY 2022 budget request for the Treasury Department on June 23 © Greg Nash Treasury Secretary Janet Yellen answers questions during a Senate Appropriations Subcommittee hearing to examine the FY 2022 budget request for the Treasury Department on June 23

Yellen's warning, delivered to congressional leaders on Wednesday that the country could default on its debt as soon as next month is casting new urgency on the behind-the-scenes discussions about how to raise the debt ceiling.

Nancy Pelosi says Democrats want to pay 'the Trump credit card' by striking a debt ceiling deal with the GOP

  Nancy Pelosi says Democrats want to pay 'the Trump credit card' by striking a debt ceiling deal with the GOP Treasury Sec. Janet Yellen told Pelosi that "extraordinary measures" to pay US bills will likely run out in October, earlier than planned."We're paying the Trump credit card with what we would do to lift the debt ceiling," Pelosi said during a Wednesday press conference. "It's the responsible thing to do. I would hope Republicans would act in a similar way," she added.

Yellen had previously said in July that there were scenarios in which the Treasury could exhaust its special measures and run out of cash “soon after Congress returns from recess” in September. The T-Bill curve is showing serious stress around this timeframe As Bloomberg reports, Democratic lawmakers are expected to attach a measure addressing the debt limit to a stopgap spending bill that will be needed to ensure the federal government stays funded past the start of the fiscal year on Oct. 1. Almost all Republican senators have pledged to vote against lifting or suspending the limit, tying that

FILE PHOTO: Yellen testifies about Treasury budget request. WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen on Wednesday again urged Congress to tackle the nation's debt ceiling , saying it was unclear how long Treasury's efforts to temporarily finance the U.S. government would last and citing ongoing economic worries over the pandemic. Democrats and Republicans are staring down a historic fiscal crisis if they do not act, which could trigger a catastrophic default on debt repayment obligations or a temporary shutdown of some federal operations.

No clear end game is in sight.

Democrats could need 10 GOP votes to raise the debt ceiling if Republicans filibuster the measure. Democrats have only 50 votes in the Senate, and GOP leaders have indicated they will not help raise the borrowing limit.

Including a debt ceiling hike in the budget reconciliation measure that Democrats are now drafting would be one way around the GOP. The budget rules prevent a GOP filibuster.

Democratic leaders have signaled they don't want the debt ceiling to be a part of that package.

"We won't be putting it in reconciliation," Speaker Nancy Pelosi (D-Calif.) told reporters on Wednesday.

It's also unclear whether the package will be finished in time to meet the debt deadline. Yellen on Wednesday said the limit would be breached in October.

Mitch McConnell says 'America must never default' as he doubles down on the GOP refusing to help Democrats raise debt ceiling

  Mitch McConnell says 'America must never default' as he doubles down on the GOP refusing to help Democrats raise debt ceiling Republicans are digging in on their opposition to help Democrats renew the US' ability to pay its bills ahead of a potential default in October."America must never default," the Kentucky Republican said in an interview with the Louisville Courier-Journal published Thursday.

The debt ceiling , which hit trillion in August 2019, is the legal limit on the total amount of debt that the federal government can borrow on behalf of the public, according to the Committee for a Responsible Federal Budget (CRFB). Once the suspension lifted, the new limit was reinstated House Speaker Nancy Pelosi said Tuesday that Congress has "several options" over the coming weeks to raise, or suspend, the debt ceiling before the U.S. government runs out of cash to pay its bills. But she rejected a push to tether the debt limit to the .5 trillion tax and spending bill that Democrats are

U.S. Treasury Secretary Janet Yellen on Wednesday again urged Congress to tackle the nation's debt ceiling , saying it was unclear how long Treasury's efforts to temporarily finance the U.S. government would last and citing ongoing economic worries over the pandemic. Democrats and Republicans are staring down a historic fiscal crisis if they do not act, which could trigger a catastrophic default on debt repayment obligations or a temporary shutdown of some federal operations. Leaders of the Democratic-led Senate and House of Representatives are expected to force votes to lift the .4 trillion debt limit

"The time for Congress to act is now to make sure the U.S. does not come close to defaulting on some of its obligations," said Rachel Snyderman, associate director at the Bipartisan Policy Center, a non-partisan think tank that closely tracks the debt limit. "But what's concerning right now is that there are so many important priorities at play," she continued.

GOP lawmakers helped suspend the debt ceiling under former President Donald Trump, who added to the debt by signing a huge tax-cut bill and several major spending bills.

But the GOP has vowed not to provide votes for President Biden as Republicans fume over Democrats' plan to pass the $3.5 trillion spending package under budget reconciliation rules.

The GOP wants to make Democrats own both the spending measures and the debt vote, with the view it will help them retake majorities in the House and Senate in next year's midterm elections.

EXCLUSIVE: White House to go on offense against GOP on debt ceiling, Trump-era deficits

  EXCLUSIVE: White House to go on offense against GOP on debt ceiling, Trump-era deficits EXCLUSIVE: The White House is ending its hands-off approach to the ongoing debt ceiling standoff between Democratic and Republican leadership on Capitol Hill and is pressing Senate Minority Leader Mitch McConnell to stop "playing political games" with the economy.McConnell, despite pleas from House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer, said in April that Republicans would not vote to raise or suspend the debt ceiling and that Democrats must include the measure in budget reconciliation.

Treasury Secretary Janet Yellen warned congressional leaders on Wednesday that she expects the country's debt limit will hit its … Speaker of the House Nancy Pelosi cited the debt incurred under President Donald Trump as the reason Congress needs to act to raise the debt ceiling . "We're paying the Trump credit card with what we would Business Insider.

Yellen has a mixed record when it comes to fiscal policy. Although she has repeatedly called for measures to reduce debt , she also recently touted the need for "extraordinary fiscal support" in the pandemic. Her reported nomination is being hailed on Wall Street and in Washington as generally positive, but she will face a key test in her Senate confirmation hearings as Bell added: "All sorts of progressive insider types have a Yellen blind spot, and it's obvious why: she has strong personal relationships with so many high-ranking lefty DC policy people and politicians, and the word spreads.

Senate GOP Leader Mitch McConnell (R-Ky.) jabbed last month as the fight ramped up that if Democrats were going to greenlight the spending "shouldn't Democrats be proud to own all the debt it requires?" And 46 GOP senators signed a letter vowing that they won't support raising the debt ceiling, leaving Democrats short of the votes.

Doug Andres, a spokesman for McConnell, said on Wednesday that flirting with a debt default would be a "crisis" of Democrats "own making."

"Democrats control Washington now. They can raise the debt limit on their own," he said.

Senate Majority Leader Charles Schumer (D-N.Y.) blasted Republicans on Wednesday during a conference call with reporters, saying that opposing a debt hike would be a "horrible" and "despicable act."

"It would be just the height of irresponsibility for Republicans to play games to take the debt limit hostage," he said.

Allowing the nation to default would be unthinkable, but it's not entirely clear how Biden and Democrats will deal with the issue.

The increasingly partisan fight comes as Congress deals with a full plate of legislative issues, including funding the government by month's end and the sweeping $3.5 trillion spending package.

What Republicans should demand in exchange for raising the debt ceiling

  What Republicans should demand in exchange for raising the debt ceiling The Congressional budget process, developed in the 1920s and refined in the 1970s, has clearly broken down. Annual budgets are almost never completed on time, and, as a result, we have recurring threats of government shutdowns as parties battle over the terms of continuing resolutions. At the end of this month, we will once again need a continuing resolution in addition to a debt ceiling bump.The time has come to once again update our budget processes to fit today's realities. Last year, the National Academy of Public Administration (NAPA) offered several reform proposals worth considering.

Yellen tried to drive home the stakes in a letter to lawmakers warning that amid a pandemic, which rocked the global economy, "it would be particularly irresponsible to put the full faith and credit of the United States at risk."

The debt ceiling kicked back in on Aug. 1. after a suspension included in a 2019 budget deal expired without action from Congress. The Treasury Department has been using so-called "extraordinary measures" to keep the U.S. solvent since then, but that will run out next month, Yellen warned Wednesday.

"Once all available measures and cash on hand are fully exhausted, the United States of America would be unable to meet its obligations for the first time in our history," Yellen said.

"Given this uncertainty, the Treasury Department is not able to provide a specific estimate of how long the extraordinary measures will last. However, based on our best and most recent information, the most likely outcome is that cash and extraordinary measures will be exhausted during the month of October," she continued.

The federal debt limit is a legal cap on how much debt the U.S. can take on to pay obligations already approved by the president and Congress for several years. Raising the ceiling does not erase or create any new debt, but instead gives the federal government more room to pay off its bills.

Mitch McConnell warns that Republicans won't back down from vow to force Democrats to raise debt ceiling alone: 'Do you guys think I'm bluffing?'

  Mitch McConnell warns that Republicans won't back down from vow to force Democrats to raise debt ceiling alone: 'Do you guys think I'm bluffing?' McConnell is determined to resist Democratic pressure to raise the debt ceiling alongside them. The showdown could derail the economic recovery. See more stories on Insider's business page. Senate Minority Leader Mitch McConnell appears more determined than ever to hold the Republican line from breaking on the debt ceiling. In an interview with Punchbowl News, the Kentucky Republican fired a warning shot to Democrats as he dug in further on a view he's publicly expressed since late July."It's their obligation. They should step up. It's hard being in the majority.

Wall Street and the banking system have grown accustomed to high-stakes fights over the debt ceiling in Washington.

Credit ratings firm Standard & Poors downgraded the county's credit rating during a 2011 showdown over the debt limit, and the 2013 debt limit fight likely added tens of millions of dollars to the national debt through higher borrowing costs, according to a Government Accountability Office report.

But until the deadline gets much closer, market reaction seems unlikely to put much pressure on lawmakers and the administration.

Still, Synderman noted that yields on short-term Treasury bonds have risen in recent weeks as investors become increasingly concerned about the risk of a default, particularly as the impact of the pandemic limits the ability to nail down when it may happen.

The general dynamics of the fight have been brewing for months: Senate Republicans previously got non-binding language into their conference rules recommending that any hike in the debt ceiling is contracted by spending reforms or cuts.

And Democrats have warned that they won't negotiate on the debt ceiling, noting that Republicans had helped put up the votes under Trump.

"Now they want to risk a recession by refusing to pay debts largely accrued before Biden took office. We will not negotiate with Republicans to convince them to do the job they were elected to do," Sen. Elizabeth Warren (D-Mass.) tweeted on Wednesday.

Another option for passing the debt ceiling would be to include it in a short-term government funding bill Congress needs to pass by the end of the month to avert a government shutdown. But that could risk a shutdown if Republicans balk too close to the deadline.

Pelosi declined to say how Democrats would raise the debt ceiling but urged Republicans to act in a "responsible way."

"We'll have several options. We'll make them well known, too, as we narrow and as we go forward. But... it has to happen. Again, three times during the Trump administration, we all cooperate to get past this, and, hopefully, they will be responsible," she said.

Schumer similarly demurred, telling reporters that Democrats have a "number of different ways" they could address the debt ceiling.

"Stay tuned," he added.

White House warns of an economic recession if the debt ceiling is hit .
WASHINGTON (AP) - Senate Minority Leader Mitch McConnell has warned Treasury Secretary Janet Yellen he is not budging on his demand that Democrats go it'Hitting the debt ceiling could cause a recession. Economic growth would falter, unemployment would rise, and the labor market could lose millions of jobs,' a new White House fact sheet reads.

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