Washington, D.C. – U.S. Treasury Secretary Janet Yellen told House Speaker Nancy Pelosi Friday that unless Congress acted quickly to raise the statutory limit on the amount of money the federal government can borrow, she would be forced to “start taking certain additional extraordinary measures” to prevent the United States government from defaulting on its financial obligations.
In a letter sent to Pelosi and other members of the congressional leadership in both parties, Yellen asserted that an increase or continued suspension of 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.”
With just days to go before the statuary suspension of the debt limit ends at noon on July 31, the need for congressional action has already become a political football. Both parties are trying to use the issue on Capitol Hill to gain leverage over the other to either stop or move through to final passage several pieces of legislation that are a top priority for the Biden Administration.
The full text of the letter is as follows:
Dear Madam Speaker:
As you know, the Bipartisan Budget Act of 2019 suspended the statutory debt limit through Saturday, July 31, 2021. I am writing to inform you that beginning on Sunday, August 1, 2021, the outstanding debt of the United States will be at the statutory limit.
Today, Treasury is announcing that it will suspend the sale of State and Local Government Series (SLGS) securities at 12:00 p.m. on July 30, 2021. The suspension of SLGS sales will continue until the debt limit is suspended or raised. If Congress has not acted to suspend or increase the debt limit by Monday, August 2, 2021, Treasury will need to start taking certain additional extraordinary measures in order to prevent the United States from defaulting on its obligations.
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. The current level of debt reflects the cumulative effect of all prior spending and tax decisions, which have been made by Administrations and Congresses of both parties over time. Failure to meet those obligations would cause irreparable harm to the U.S. economy and the livelihoods of all Americans. Even the threat of failing to meet those obligations has caused detrimental impacts in the past, including the sole credit rating downgrade in the history of the nation in 2011. This is why no President or Treasury Secretary of either party has ever countenanced even the suggestion of a default on any obligation of the United States.
The period of time that extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the challenges of forecasting the payments and receipts of the U.S. government months into the future, exacerbated by the heightened uncertainty in payments and receipts related to the economic impact of the pandemic. Given this, Treasury is not able to currently provide a specific estimate of how long extraordinary measures will last. However, there are scenarios in which cash and extraordinary measures could be exhausted soon after Congress returns from recess. For example, on October 1 alone, cash and extraordinary measures are expected to decrease by about $150 billion due to large mandatory payments, including a Department of Defense-related retirement and health care investment.
In recent years Congress has addressed the debt limit through regular order, with broad bipartisan support. I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible.
It is highly unlikely members in either party will allow the deadline to be reached without reaching some kind of compromise agreement to forestall the U.S. defaulting on its debt. Such a move would, most economists agree, that even a technical default would put in motion a disruption in the global financial markets of what one economist called “a global disruption of unknown and unknowable proportions.”
Such a collapse, which would provide China an ample boost in their campaign urging the replacement of the dollar as the global reserve currency, would likely be blamed on the Republicans. Fear that it might in turn limits the ability of spending restraint advocates to argue the deadline should be allowed to come and go unless reforms are made.
This game of economic chicken has been tried before, with the first one to blink generally considered the loser.
Peter Roff
Peter Roff is affiliated with several Washington, D.C. public policy organizations and is a former U.S. News and World Report contributing editor who appears regularly as a commentator on the One America News network. He can be reached by email at [email protected]. Follow him on Twitter @PeterRoff.
Repeal the Federal Reserve Act and repudiate our debt to these people. We’re quite capable of printing currency without interest. In fact, that’s how our economy was supposed to be operated.
Before paper money was backed by gold. Now its your word that you will make printed money good by saying you’re going to pay it back, because it was borrowed in the 1st place.
Old Tricky Dick took us off the Gold Standard, and since then it has been Katy Bar the Door for our government to spend Funny Money on their White Elephants and perks. They’ve mortgaged us and several generations with their irresponsible budgeting practices, and other largess. U.S. taxpayers don’t have a chance against this regime if they ‘follow the rules’ set forth by liberals. Hence, they’ve placed us in a corner, and Trump was one among many efforts by our citizens to free us from these tyrants.
Catholics have controlled the USA since 1956… Now there is not one AMERICAN on the SCOTUS… Almost all on SCOTUS are CATHOLIC “C” traitors.
And the “previously enacted expenditures.” all came from Pelosi, CATHOLIC TRAITOR. NO CATHOLIC “C” is an American. They are Catholics and have allegiance to the VATICAN , not the USA.
Have you ever heard of a CATHOLIC “C” nation that has not overspent?
Have you ever heard of a CATHOLIC “C” nation that is not corrupt?
Have you ever heard of a “C” nation that is successful?
Have you ever heard of a “C” nation that does not need to ‘export’ the illiterate ILLEGAL ALIEN CATHOLIC “C” INVADERS?
Vote for ANY CATHOLIC “C” and you vote for a traitor.
Vote for ANY CATHOLIC “C” and the borders will never be secured.
“our debt” We the People didn’t incurred in any debt the corrupt Congress embezzling and taxpayers money laundering schemes…
You might bring that up to our congressional representatives, because every cent they spend is our liability, and they’re exhausting our credit line with their deficits, defense expenditures, luxuries, stimulus payments and keeping illegal aliens fed, housed, educated and insured under Obamacare.
Congress gives money away, then it comes right back to their bank account.
Or enter Great Depression 2 ahead
It sure looks that way. This version is characterized with tens of thousands of Americans already living on the streets or in their cars before a depression is in full swing. During the 1920s, the U.S. economy was booming. Our current scenario resembles a ‘progressive’ disease.
I’m a pilot. I used to own a plane, which you can view on You Tube: just type N8872L. (I made a small fortune with that little Grumman. I started with a large fortune…) Now I’m unable to afford to fly, so I watch You Tube presentations of plane owners cavorting around the country in their private jets and high performance singles and war birds. Something is familiar about their physical appearances. It must be their noses…..
The commiecrats are good at spending other people’s money
Raise the debt limit??? What good is a limit when they can – and always do – raise it??? Pass a budget with debt payback and stick with it until eliminated. REDUCE THE BUDGET ITEMS AND SPENDING!
Why not generate goods here in the US so we don’t have to depend on some other country’s money?
I told my banker that if he expected payment on my 117th mortgage, he had better approve my request for a 118the mortgage. That my great grand kids would make good.
Democraps sleepy Joe Biden, crazy Pelosi and crying Schumer should be forced to pay for the outrageous federal spending; funds taken from their own personel bank accounts!
yes was the republicans fault, well kinda because the reps did let stuff get way out of hand andnvote for many of these really bad items in proposed budgets. No the dems have always been the ones to spend, spend, spend, then expect us to pay, pay pay,. I say get these crooked politicians out, arrest thier bosses, the super rich, confiscate all of these crooks monies/possessions, and pay our debt off. Then go back ti the gold standard, if we have any
Tax and Spend O-crats ! Raise the limit so they can steal more and hide it in their pork programs
printing more bills will decrease the value of each bill, stupid!…..
Raise the debt limit??? HOW ABOUT STOP SPENDING!!!!
Stop Spending ? !!!! Democrats can’t have that . And Joe wouldn’t know how to act
Smoke and mirrors. What difference does it make if congress acts. The spending will continue. And the fed will be the only one buying the T bills. And that is nothing but moving phoney money from one pocket to another.
Want to see what is really going on? Look at inflation. That is the results of deficit spending. And ALL of Washington KNOWS that.
I believe Janet Yellen is responsible for holding up the full launch of NESARA/GESARA She is baulking like many corrupt Bankers
LISTEN UP…The DEMOCRATS are BURNING MONEY Like Theres N O TOMORROW. HOW About WE HANG THEM HIGH??? HA…HA…JUST KIDDING. From SamuraiQueen.😄😄😄
Cancel Religion, Cancel Parents Rights, Cancel Freedom of Speech, Put masks on everyone and fill them with fake science, and openly support communist cuba is how these communist democrat cult members are stealing our FREEDOMS and attempting to bankrupt our country.
Remove and find a cure for communist democrat cult disease!
Let Nasty Nancy and Chuckie-Wuckje chip in from their private stock. That will lower the debt significantly.
Well this only proves that Biden’s plans for the U.S. will fail because the U.S. has no money to pay for any of his plans.
What happens if we don’t?
Happens when you keep raiding the piggy bank, paying able bodied people not to work, pay for people who aren’t American citizens, the democrat wish list keeps growing.
The bankruptcy of the government is the plan right? Democrats secret goal is our forced membership in a Global Communist Country run by the unelected officials in the United Nations. Their obstacles are the constitution, which they openly violate while the Supreme Court does nothing. The steady economy must collapse by wasteful spending, to be followed by more Marxist ideology to explain by lying about the issues. Next there is sovereignty, which they already gave up to get millions and millions here on welfare to help rig elections under HR1, which violates the constitution by removing state rights. Still another wall to the new world order is patriotism, and nationalism. Our innocent children are now forced to be indoctrinated with Marxist doctrine, as is our military, using tactics created by the Khmer Rouge , our military innocent children are forced to learn to hate America against their.
“Debt Limit??!” what a farce. there is no debt limit on what the federal government “borrows”
I thought that if the debt went over 20 trillion, we’d no longer be able to just pay the interest.
Raising the debt ceiling =taxpayers money laundering and embezzlement..
By all means, let’s continue to spend more money we don’t have & get ourselves even further into debt.
She did enough damage to our monetatay system and now wants to continue this absurdity with even greater debt we can’t pay off.
Does anyone believe that increasing the debt limit will not increase our debt ? Sounds like double talk to me , how do they think they got us into the predicament to start with . They need to control their spending and free hand outs , close our borders and stop this illegal immigration , not increase our debt level .
NO,NO,NO the debt must not be raised it is too high as it is, it is time that politicians stop wasting the taxpayers money.
Quit given free range of our taxes to to be pissed away!!!
Let the Billionaires starting with Biden, Soros, Clintons, Bill Gates, etc… And the multi millionaires pay off the debt. They’re the ones who’ve been stealing from the middle class and the poor for generations and tax loopholes. Taking money from seniors Social Security.
And the “previously enacted expenditures.” all came from Pelosi, CATHOLIC TRAITOR. NO CATHOLIC “C” is an American. They are Catholics and have allegiance to the VATICAN , not the USA.
Have you ever heard of a CATHOLIC “C” nation that has not overspent?
Have you ever heard of a CATHOLIC “C” nation that is not corrupt?
Have you ever heard of a “C” nation that is successful?
Have you ever heard of a “C” nation that does not need to ‘export’ the illiterate ILLEGAL ALIEN CATHOLIC “C” INVADERS?
Vote for ANY CATHOLIC “C” and you vote for a traitor.
Vote for ANY CATHOLIC “C” and the borders will never be secured.