Treasury Secretary Warns McCarthy To Raise Debt Limit Again, Doesn’t ‘Cost Taxpayers Money’

In a letter House Speaker Kevin McCarthy said that Treasury Secretary Janet Yellen confirmed that the United States will exceed the statutory debt ceiling limit on Wednesday and warned against not raising it.

Yellen noted that roughly one year ago, through Public Law 177-73, the federal government had increased the statutory debt limit  — the total amount of money the federal government can borrow to meet its legal obligations —  including entitlements such as Medicare and Social Security as well as military salaries and interest on the national debt — to roughly $31.381 trillion

Threatening “extraordinary measures” Yellen listed two options that the Treasury Department could take to ensure the federal government didn’t default. The first is “redeeming existing, and suspending new, investments of the Civil Services Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund” The second is the best. “suspending reinvestment of the Government Securities Investment Fund of the Federal Employees retirement system Thrift Savings Plan.”

Yellen suggested that raising the debt limit would be a good idea. “does not authorize new spending commitments or cost taxpayers money.”

Yellen warned Congress in September 2021 that the national debt was at $28.7 trillion and that it would not be raised.

Write in The Wall Street Journal, Yellen stated:

In just days, millions could be cash-strapped. There could be indefinite delays in critical payments. It is possible for 50 million seniors to stop receiving Social Security checks at one time. Troops could be unpaid. Millions of families that rely on the child tax credit monthly could be affected by delays. America would default on its obligations.

The U.S. has never defaulted. It has never defaulted. Not once. A default could lead to a sharp drop in stock prices, an increase in interest rates and financial turmoil. The current economic recovery could end in recession with billions of dollars in growth and millions of job losses.

This crisis would make us a permanent weaker country. For about a century, America’s creditworthiness has been a major advantage over our economic competitors. We are able to borrow more than any other country and defaulting could jeopardize our already enviable fiscal situation. America would become more expensive because of the higher cost to borrow. Mortgage payments, car loans, credit card bills — everything that is purchased with credit would be costlier after default.

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