The government will run out of funds in October, and failure to raise the debt ceiling will result in a shutdown

Financial Secretary Janet Yellen Warning issued Congress The Associated Press reported that unless the debt ceiling is raised, the U.S. government will not be able to continue to fund government activities, leading to a shutdown in October.

According to estimates by the Congressional Budget Office, due to the exhaustion of government funds, funding for items such as medical insurance, social security, and supplementary security income may stop in October or November.

In a letter sent to congressional leaders on Wednesday, Yellen mentioned similar concerns, saying that the Treasury Department may exhaust all available funds and unconventional measures as soon as next month.

She pointed out that the additional pressure from the COVID-19 pandemic and related financial relief has increased the uncertainty over how long she can prevent the government from increasing the borrowing limit.

“In view of this uncertainty, the Ministry of Finance cannot specifically estimate how long the extraordinary measures will last. However, based on our best and latest information, the most likely outcome is that the cash and extraordinary measures will be in October. As more With the emergence of more information, we will continue to update Congress on the latest situation,” Yellen wrote.

For more reports from the Associated Press, please see below.

The debt limit is the amount that Congress allows the Treasury Department to borrow to keep the government running. When the debt limit was suspended for two years in July 2019, the public debt subject to the limit was $22 trillion.

When the debt limit was restored, the limit was reset to 28.4 trillion US dollars, the current debt level. The substantial growth in the past two years reflects the massive support voted by Congress to help individuals and businesses survive the global pandemic.

Yellen has been using what the law calls “unconventional measures”, which cover various bookkeeping strategies Yellen can take to clear debts from various government trust funds, including federal workers’ pensions. Once the debt limit deadlock is resolved, the funds withdrawn from the trust fund will be restored with interest.

Yelon urged Congress to take immediate action.

Yellen said: “Once all available measures and cash on hand are used up, the United States of America will be unable to meet its obligations for the first time in history.”

although Republicans While Congress often uses debt limit debates to obtain budget concessions from Democratic presidents, lawmakers have never refrained from raising the debt limit or suspending the debt limit to allow the government to continue borrowing.

However, in 2011, the budget war between the Obama administration and the Republican Party dragged on for a long time, so that the credit rating agency Standard & Poor’s downgraded some Treasury bonds from AAA for the first time in history.

“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit will cause serious damage to corporate and consumer confidence, increase taxpayers’ short-term borrowing costs, and have a negative impact on the credit rating of the United States. ,” Yellen said.

She said: “The delay in questioning the federal government’s ability to fulfill all its obligations may cause irreparable damage to the U.S. economy and global financial markets.” “I respectfully urge Congress to act as soon as possible to protect the full confidence and credibility of the United States.”

Yellen said that the recent measures to resolve the debt ceiling have received “broad support from both parties,” but Republicans say they will oppose Democratic Party The debt limit is dealt with by attaching a clause to the emergency budget bill that Congress needs to pass before the start of the budget year on October 1. This legislation is needed to avoid government shutdown.