WASHINGTON (Reuters) - U.S. Treasury Secretary Janet Yellen has urged lawmakers to increase or suspend the nation’s debt limit as soon as possible and warned that if Congress does not act by Aug. 2 the Treasury Department would need to take “extraordinary measures” to prevent a U.S. default.
In a letter to House of Representatives Speaker Nancy Pelosi, Yellen said that Oct. 1, the first day of the next fiscal year, could be a critical date for the U.S. ability to pay its obligations without debt limit legislation due to large federal outlays scheduled for then.
In the letter, also sent to other congressional leaders from both parties, Yellen said U.S. debt would be at the statutory limit on Aug 1, when a two-year suspension is set to expire.
A partisan fight over raising the debt ceiling erupted in Congress this week. Republicans have seized upon the debt limit issue to attack Democrats for pushing legislation that they say has led to inflation and escalating public debt.
“Today, Treasury is announcing that it will suspend the sale of State and Local Government Series (SLGS) securities at 12:00 p.m. on July 30, 2021,” Yellen wrote.
The suspension of such sales to state and local municipal bond issuers will continue until the debt ceiling is suspended or raised, Yellen said.