In remarks before a Senate committee, Federal Reserve Chairwoman Janet Yellen reaffirmed the Treasury Department’s assessment that it “may run out of cash in the first half of September” if Congress does not raise the nation’s federal debt limit.
Yellen noted that the Treasury “could run out of cash sooner” depending on factors such as tax revenues and spending patterns. She also pointed out that there is a “significant amount of uncertainty” as to when the Treasury would exhaust its borrowing authority.
Yellen’s testimony highlights once more the need for congressional action to raise the legal limit on the amount of debt the federal government can issue, commonly called the debt ceiling. The current debt limit is $20.5 trillion, with the Treasury having acknowledged that it could reach that threshold as soon as June 1.
Congress has until May 19 for a vote to increase the debt limit. Republican leaders in Congress have taken a wait-and-see approach, repeatedly arguing that they do not want to raise the debt limit without making reductions in spending. Democrats have countered that debt ceiling debates should be time to work on tackling the country’s ever-growing debt problem without resorting to cuts in government services and programs.