Treasury Secretary Janet Yellen on Tuesday told House Speaker Nancy Pelosi that Congress has just under three weeks to address the looming debt ceiling and avoid near-certain economic calamity.
“We now estimate that Treasury is likely to exhaust its extraordinary measures if Congress has not acted to raise or suspend the debt limit by October 18,” she wrote in a letter. “At that point, we expect Treasury would be left with very limited resources that would be depleted quickly.”
Yellen, who will testify before the Senate later Tuesday morning, warned in a separate statement to lawmakers that failure to suspend or raise the debt limit would lead to the first-ever U.S. default and have severe consequences for the U.S. economy.
“It is imperative that Congress swiftly addresses the debt limit. If it does not, America would default for the first time in history,” she said in her remarks to the Senate Banking Committee. “The full faith and credit of the United States would be impaired, and our country would likely face a financial crisis and economic recession.”
Because the U.S. has never defaulted on its debt before, economists have to rely on forecasts and guesswork when trying to estimate the economic fallout a default would bring. Still, most economists say such a default would bring about financial calamity that could trigger a broad market sell-off and economic downturn amid a spike in interest rates.
Yellen’s letter to Pelosi, D-Calif., is the latest in a string of communications between the Treasury secretary and congressional leadership as the U.S. nears missing a payment to its debtholders. A spokesman for the House speaker did not immediately respond to a request for comment.
Pelosi and Senate Major Leader Chuck Schumer, D-N.Y. have in recent weeks called upon Republicans to pass a suspension to the debt ceiling as a bipartisan duty.
“Now, as Minority Leaders McCarthy and McConnell welcome a disaster they both know is coming, Republican luminaries, former Treasury Secretaries, business groups, and top economists are joining the growing chorus of Americans demanding that they stop putting politics over the health of the U.S. economy,” Pelosi’s office said last week, prior to Yellen’s latest letter.
Senate Republicans on Monday blocked a bill that would fund the government and suspend the U.S. borrowing limit. The GOP opposed the House-approved bill because it included a provision to suspend the debt ceiling, a task Republicans say ought to be up to Democrats alone.
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“Bolstered” by their links to Mar-a-Lago, the three men “violated the law and sought to exert improper influence over government officials to further their own personal interests,” said Oversight Committee Chairwoman Carolyn Maloney, D-N.Y., and Veterans’ Affairs Committee Chairman Mark Takano, D-Calif., in a press release.
“The documents we are releasing today shed light on the secret role the Trio played in developing VA initiatives and programs, including a ‘hugely profitable’ plan to monetize veterans’ medical records,” Maloney and Takano said.
They accused the trio of violating transparency rules established by the Federal Advisory Committee Act, or FACA.
“The VA’s struggles were no secret,” the three men said in a joint statement sent to CNBC by a representative for Perlmutter.
“From the well-chronicled wait time issues to quality of care concerns, there had been numerous setbacks in providing our veterans with the level of care they deserve. That is why, when the President and the senior leadership at the VA asked for our help, we gladly volunteered our time to do so.”
“As the emails released show, we were asked repeatedly by former [VA] Secretary [David] Shulkin and his senior staff, as well as by the President, to assist the VA and that is what we sought to do, period,” the statement said.
