Yellen says U.S. could hit debt limit on Dec. 15, giving Congress more time to strike deal

Janet Yellen, U.S. Treasury secretary, speaks during an interview at the National Association of Business Economics (NABE) annual meeting in Arlington, Virginia, U.S., on Tuesday, Sept. 28, 2021.

Amanda Andrade-Rhoades | Bloomberg | Getty Images

Treasury Secretary Janet Yellen on Tuesday told lawmakers that she now estimates that the U.S. will reach its debt limit on Dec. 15, almost two weeks later than her initial forecast.

In a letter to House Speaker Nancy Pelosi, D-Calif., Yellen explained that her revised estimate is the result of President Joe Biden’s enactment of the $1 trillion infrastructure plan earlier this week.

“Yesterday, the President signed the infrastructure Investment and Jobs Act, which appropriates $118 billion for the Highway Trust Fund,” she wrote. “These funds must be transferred into the Highway Trust Fund within one month after the enactment of the legislation, and the transfer will be completed on December 15.”

“While I have a high degree of confidence that Treasury will be able to finance the U.S. government through December 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 U.S. government beyond this date,” she added.

Those additional 12 days would offer Congress more time to strike a deal on how to lift or suspend the debt ceiling. If lawmakers fail to do so before the so-called drop-dead date, the U.S. government would default for the first time ever.

Yellen has said she expects a default would lead to a recession and jeopardize the U.S. dollar’s role as the globe’s reserve currency.

This is breaking news. Check back for updates.

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