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Yellen says without debt limit hike, U.S. could face August default risk

EconomyJun 23, 2021 03:50PM ET
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© Reuters. U.S. Treasury Secretary Janet Yellen answers questions during the Senate Appropriations Subcommittee hearing to examine the FY22 budget request for the Treasury Department on Capitol Hill in Washington, DC, U.S., June 23, 2021. Greg Nash/Pool via REUTERS

WASHINGTON (Reuters) - U.S. Treasury Secretary Janet Yellen on Wednesday urged Congress to raise or suspend the federal debt limit as soon as possible, warning that if lawmakers fail to act, the United States could face a serious risk of default as soon as August.

"I think defaulting on the national debt should be regarded as unthinkable," Yellen said in testimony to a Senate Appropriations subcommittee. "Failing to increase the debt limit would have absolutely catastrophic economic consequences."Yellen said that to avoid uncertainty for financial markets, Congress should pass new debt limit legislation - allowing the Treasury to continue borrowing - before the latest suspension expires on July 31.

The Treasury in the past has been able to stave off potential default for several months by employing extraordinary measures such as suspending contributions to government employee pension funds, but spending on COVID-19 relief programs has added uncertainty to government cash flows.

These measures could be exhausted in August, when Congress takes its traditional summer recess, she said.

Yellen says without debt limit hike, U.S. could face August default risk
 

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Comments (2)
Aux Gold
Aux Gold Jun 25, 2021 12:27AM ET
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Lol i know what to do. Shrink the federal goverment by 90% and audit the Federal reseve then back the dollar with gold. BAM… problem solved you have the best economy and the best dollar
John Miller
John Miller Jun 23, 2021 3:58PM ET
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So borrowing more is the answer?
Sean Livingstone
Sean Livingstone Jun 23, 2021 3:58PM ET
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Sadly, it is the only answer right now.... Since many people don't want to work.
Marco Loureiro Silva
Marco Loureiro Silva Jun 23, 2021 3:58PM ET
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I don't want to work, just print money and give it to me, let other countries produce things, we have the infinite print power!
 
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