(PresidentialInsider.com)- The deadline to avoid economic catastrophe is October 18, according to Treasury Secretary Janet Yellen.
By that date, she said that Congress must agree to either suspend or raise the debt limit. If it doesn’t happen by then, the United States will most likely default on its national debt.
In a letter the treasury secretary sent to leaders of both parties in Congress, she wrote:
“At that point, we expect the Treasury would be left with very limited resources that would be depleted quickly. It is uncertain whether we could continue to meet all the nation’s commitments after that date.”
October 18 is only the Treasury’s “best estimate” for the drop-dead date, Yellen wrote, saying “the federal government’s cash flows are subject to unavoidable variability.”
“For example, the government’s daily gross cash flow (excluding financing) over the past year averages nearly $50 billion per day and has exceeded $300 billion. As a result, it is important to remember that estimates regarding how long our remaining extraordinary measures and cash may last can unpredictably shift forward or backward.”
The uncertainty, Yellen said, underscores the “critical importance of not waiting to raise or suspend the debt limit.”
The letter Yellen wrote was sent to Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell, Speaker of the House Nancy Pelosi and House Minority Leader Kevin McCarthy.
Democrats have been working to try to handle the debt limit by continuing a resolution that would fully fund the government by Thursday in order to avert what would be a shutdown.
The House passed the legislation last week by a thin margin. However, it failed in the Senate on Monday.
Republicans had threatened to vote down that resolution if Democrats didn’t back off of their plans for multi-trillion-dollar spending plans, and they followed through on that threat on Monday.
Republicans are frustrated that Democrats continue to push forward with their plans for a $3.5 trillion spending and infrastructure plan without any support from the GOP. In addition, Democrats are starting to get pushback from within their own party, too.
In response, McConnell had been urging members of his party to not vote in favor of raising the debt ceiling as a bargaining chip.
Democrats have insisted to this point that Republicans work on a bipartisan measure to address the debt limit. They’ve pointed to instances in the past where it was done on a bipartisan basis under other presidents.
They haven’t succeeded in doing so thus far, though, which could force them to make a high-stakes decision or face a full federal government shutdown later this week.
In the letter she sent this week, Yellen urged lawmakers to work on getting something done sooner rather than later. Waiting until the last minute, she said, could be very dangerous.
The letter read:
“We know from previous debt limit impasses that waiting until the last minute can cause serious harm to business and consumer confidence, raise borrowing costs for taxpayers, and negatively impact the credit rating of the United States for years to come.
“Failure to act promptly could also result in substantial disruptions to financial markets, as heightened uncertainty can exacerbate volatility and erode investor confidence.”