Treasury Secretary Janet Yellen announced Monday that her department will continue to use extraordinary measures to prevent the accrual of debt after Congress provided “only a temporary reprieve” to a potential default.
In a Monday letter to congressional leaders, Yellen wrote that while a recent increase to the debt ceiling will likely keep the U.S. solvent through Dec. 3, “it is imperative that Congress act to increase or suspend the debt limit in a way that provides longer-term certainty that the government will satisfy all its obligations.”
“I respectfully urge Congress to act to protect the full faith and credit of the United States,” Yellen wrote.
The secretary said that Treasury will continue to hold off on investments in the Civil Service Retirement and Disability Fund (CSRDF) and Postal Service Retiree Health Benefits Fund (PSRHBF) that are not required to fund benefits for current recipients until the debt ceiling is increased or suspended beyond Dec. 3.
President Biden signed Thursday a bill to increase the federal debt limit by $480 billion, which Yellen said “provides a high degree of confidence” that Treasury will be able to pay expenses as they come due until Dec. 3. A short-term deal to fund the federal government will also lapse then, setting up a potential dual fiscal crisis less than three weeks before Christmas.
The debt ceiling was reimposed Aug. 1 when a two-year budget deal struck under former President Trump expired. Yellen warned in September that the U.S. was on track to default Monday if Congress did not raise or suspend the debt ceiling.
Raising or suspending the debt ceiling does not affect future congressional spending or the size of the national debt. Doing so allows the Treasury Department to pay expenses already approved over several decades by presidents and lawmakers by issuing bonds to generate cash.
The U.S. has never defaulted and would likely trigger untold economic and financial damage if it missed a debt payment for the first time in history. Even so, Republicans have insisted that Democrats must raise the debt ceiling on their own through the budget reconciliation process.
While Democrats could raise the debt ceiling by a specific amount with only Democratic votes through budget reconciliation, it also requires an uncapped number of amendment votes that could cause future legislative or political challenges. Democrats insist that Republicans must stand back from their unprecedented filibuster of debt ceiling legislation and allow a bill to pass through regular order with only Democratic votes.
Republicans briefly relented from their blockade earlier this month after Senate Minority Leader Mitch McConnell (R-Ky.) struck a deal with Senate Majority Leader Charles Schumer (D-N.Y.) to allow a $480 billion debt ceiling hike to advance. But the ensuing backlash from GOP senators, McConnell’s struggle to get enough Republicans on board with the deal, and a subsequent victory speech prompted the minority leader to rule out further deals.