WASHINGTON (REUTERS) – United States Treasury Secretary Janet Yellen on Tuesday (Nov 16) extended a deadline for a potential US government default to Dec 15 from Dec 3, giving Congress more time to raise the federal debt ceiling as lawmakers also consider a massive social spending and climate bill.
Dr Yellen said in a letter to congressional leaders that the adjustment was “based on our most recent information”, a reference to Treasury tax collections and cash flow data.
She said the Treasury would be able to make a US$118 billion (S$160 billion) transfer to the Highway Trust Fund required on Dec 15, a month after US President Joe Biden’s signing of a sweeping infrastructure Bill on Monday. But the transfer would count against the debt ceiling, as the funds would be invested in non-marketable Treasury securities.
“While I have a high degree of confidence that Treasury will be able to finance the US government through Dec 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 US government beyond this date,” Dr Yellen said.
She repeated her call for Congress to raise or suspend the debt limit “as soon as possible” to maintain the full faith and credit of the US.
The new estimate gives Democrats in Congress a bit more breathing space as they seek to pass a US$1.75 trillion measure to provide new energy tax breaks and fund new benefits for child care, universal pre-school and an expanded child tax credit.
Senate Majority Leader Chuck Schumer said on Tuesday that Senate Democrats aimed to pass the Build Back Better legislation before Christmas – a goal that has slipped this fall because of squabbling between centrist and progressive Democrats.
Democrats aim to pass the spending Bill without Republican support, but Republicans have vowed to oppose a debt limit increase.
“As the federal government’s cash flow is subject to unavoidable variability, I will continue to update Congress as more information becomes available,” Dr Yellen said.