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Monday, May 23, 2022

Treasury Secretary Janet Yellen urges Congress to increase debt ceiling and ‘protect the full faith and credit’ of the U.S.

In a letter to congressional leaders, Treasury Secretary Janet Yellen on Monday implored lawmakers to “protect the full faith and credit of the United States” by raising or suspending the U.S. debt ceiling, something she had previously requested be handled by Aug. 2, CNBC reports

The letter also notified leaders that the Treasury Department had begun using “extraordinary measures” — or emergency cash conservation steps — to keep from breaching the federal borrowing limit after it went back into effect over the weekend, per CNBC and The Wall Street Journal.

“As I stated in my July 23 letter, the period of time that extraordinary measures may last is subject to heightened uncertainty related to the economic impact of the pandemic,” wrote Yellen. “Therefore, I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible.”

The so-called “extraordinary measures” will reportedly buy the Treasury some time — but after that, Congress “will need to either raise or suspend the borrowing limit or risk the U.S. defaulting on its obligations,” writes CNBC. Defaulting, which the federal government has never done, would have “disastrous effects” on the U.S. economy. 

Lindsey Piegza, chief economist for Stifel, told CNBC that “from a procedural standpoint,” the extraordinary measures aren’t “much of a concern.” However, she added “the implication is a further showdown in Washington eroding the average American’s confidence in a cohesive, functioning government” that simultaneously highlights “ongoing infighting among policy officials” on both sides of the aisle. Read more at CNBC.

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