At the time US Treasury warned that it would exhaust those measures sometime in October or,at the latest,November. On Wednesday,in a letter to Congress,US Treasury Secretary Janet Yellen warned that the most likely outcome is that the government’s cash reserves will be exhausted in October.
Uncertainty about the levels of corporate and individual tax receipts due this month and pandemic-related relief spending meant Treasury was unable to provide a more specific estimate.
Without an increase in the debt ceiling the US would be unable to meet its obligations for the first time in its history,Yellen said.
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidences,raise short-term borrowing costs for taxpayers and negatively impact the credit rating of the United States.
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“A delay that calls into question the federal government’s ability to meet all its obligations would likely cause irreparable damage to the US economy and global financial markets,” she said.
In 2011 a similar standoff between the Republicans and Democrats during the Obama administration,while it was ultimately resolved and a default avoided,resulted in Standard&Poor’s downgrading US government debt,from AAA to AA+,for the first time in history.
There have been other recent bitter and protracted wrangles over the ceiling in 2013 and 2018 that led to non-essential government services being shut down,employees forced to take leave and some federal institutions and national parks being closed.