(Bloomberg) — The nonpartisan Congressional Budget Office on Tuesday echoed a warning by Treasury Secretary Janet Yellen that the federal government could run out of money after mid-December if lawmakers fail to raise the debt limit.
The CBO noted that the Treasury plans to transfer $118 billion to the Highway Trust Fund on Dec. 15 — a move that follows the passage of President Joe Biden’s infrastructure package earlier this month.
“If the debt limit remained unchanged and if the Treasury made that transfer in full, the government’s ability to borrow using extraordinary measures would be exhausted soon after it made the transfer,” the CBO said. “In that case, the Treasury would most likely run out of cash before the end of December.”
Yellen earlier on Tuesday reiterated her call to lawmakers to address the debt limit, saying: “If we do not, we will eviscerate our current recovery.”
Congress passed a short-term increase in the federal debt ceiling last month. The Treasury has been deploying extraordinary measures in recent weeks to avoid breaching the limit. Congressional leaders have yet to agree on a longer-term fix.
Senate Republican leader Mitch McConnell said earlier Tuesday that the U.S. won’t default on its obligations and that he is in talks with Majority Leader Chuck Schumer on a path forward to extend the debt limit. But neither leader has budged publicly from their previous stances that resulted in a stalemate over the way forward.
Yellen reiterated, in her appearance at the Senate Banking Committee Tuesday, that there are “scenarios” under which the Treasury would run out of cash after Dec. 15, but that she had a high degree of confidence the department had sufficient funds until that date.
(Updates with context starting in first paragraph.)
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