Yellen urges Congress to resolve long-term debt limit uncertainty

The recent increase in the debt limit provides only a ‘temporary deferral’

MADRID, October 19 (European press) –

US Treasury Secretary Janet Yellen called on congressional leaders to take steps to resolve long-term uncertainty over the country’s debt limit, after the law that temporarily raised the debt limit was enacted last week. Debt threshold which will prevent the government from incurring defaults until December.

In a letter, the former head of the US Federal Reserve indicated that the increase in the debt limit enacted last week provides a high degree of confidence that the Treasury will continue in its ability to fund the operations of the federal government through December 3. 2021.

“However, it is imperative that Congress increase or suspend the debt limit in a way that provides long-term certainty that the government will meet all of its obligations,” he adds.

Thus, Yellen believes that the recent increase in the debt limit provides only a “temporary deferral,” so the Treasury will have to resort to some extraordinary measures until December 3.

US President Joe Biden signed the bill last Thursday to raise the debt limit by $480 billion (more than 415 billion euros), which is expected to be enough for the government to continue fulfilling all its obligations until early December.

Thus, Biden issued the measure preventing the administration from incurring potential defaults, after receiving final approval from the US Congress when it was approved in the House, while the Senate had previously granted him authorization.

The temporary extension avoids a catastrophic default within days of the date set by the Treasury, although it is only a short-term solution and signals another potential financial crisis by the end of this year.

The dispute between the two parties has not yet been resolved. Republicans insist Democrats should act on their own to address the debt ceiling through a process known as budget adjustment. For their part, Democrats point out that the situation is a bipartisan responsibility.