After that date, Treasury’s funds “would be depleted quickly” and “it is uncertain whether we could continue to meet all the nation’s commitments after that date,” she said in a letter to congressional leaders.
Yellen again warned of dire consequences if lawmakers fail to act quickly including debt default and undermining the American dollar.
With the clock ticking, Republicans in the US Senate have stubbornly refused to support an increase or suspension of the debt ceiling, despite having pressed for it under their party’s former president Donald Trump.
Yellen called the debt limit increase a “shared responsibility” that both parties should support.
“It is imperative that Congress swiftly addresses the debt limit. If it does not, America would default for the first time in history,” Yellen told the Senate Banking Committee.
Without an increase, the government would be unable to pay salaries of public workers, send payments to retirees, or service the nation’s debt.
It also “would undermine confidence in the dollar as a reserve currency” and as a “safe haven asset,” she said.
“This would be a manufactured crisis, we have imposed on this country which has been going through a very difficult period is on the road to recovery.”
Raising the debt ceiling has been a contentious issue in Congress for the past several years, and a 2011 standoff caused S&P Global Ratings to downgrade US sovereign debt from its coveted AAA rating. (AFP)