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InvestmentsYellen extends U.S. default deadline to Dec. 15 after highway payment By...

Yellen extends U.S. default deadline to Dec. 15 after highway payment By Reuters


© Reuters. FILE PHOTO: Treasury Secretary Janet Yellen attends the House Financial Services Committee listening to in Washington, U.S., September 30, 2021. Al Drago/Pool through REUTERS
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By David Lawder

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen on Tuesday prolonged a deadline for a possible U.S. authorities default to Dec. 15 from Dec. 3, giving Congress extra time to increase the federal debt ceiling as lawmakers additionally think about an enormous social spending and local weather invoice.

Yellen stated in a letter to congressional leaders that the adjustment was “based on our most recent information,” a reference to Treasury tax collections and money circulate knowledge.

She stated the Treasury would have the ability to make a $118 billion switch to the Highway Trust Fund required on Dec. 15, a month after President Joe Biden’s signing of a sweeping infrastructure invoice on Monday. But the switch would depend towards the debt ceiling, because the funds could be invested in non-marketable Treasury securities.

“While I have a high degree of confidence that Treasury will be able to finance the U.S. government through December 15 and complete the Highway Trust Fund investment, there are scenarios in which Treasury would be left with insufficient remaining resources to continue to finance the operations of the U.S. government beyond this date,” Yellen stated.

She repeated her name for Congress to increase or droop the debt restrict “as soon as possible” to preserve the complete religion and credit score of the United States.

The new estimate offers Democrats in Congress a bit extra respiratory house as they search to go a $1.75 trillion measure to present new power tax breaks and fund new advantages for childcare, common preschool and an expanded youngster tax credit score.

Senate Majority Leader Chuck Schumer stated on Tuesday that Senate Democrats aimed to go the Build Back Better laws earlier than Christmas – a purpose that has slipped this fall due to squabbling between centrist and progressive Democrats.

AVOIDING DEFAULT

Democrats purpose to go the spending invoice with out Republican assist. Republicans have additionally vowed to oppose a debt restrict improve, placing stress on Democrats to go that measure on their very own, complicating an already difficult legislative path for the remainder of Biden’s agenda.

Senate Republican chief Mitch McConnell earlier on Tuesday signaled some wiggle room on the debt restrict, telling reporters: “We’ll figure out how to avoid default. We always do.”

Schumer stated Democrats nonetheless hoped to increase the debt ceiling “in a bipartisan way,” however sidestepped questions on whether or not Democrats would proceed with out Republican assist.

As Treasury’s reported borrowing on Monday was simply $25 million beneath the present $28.88 trillion statutory debt ceiling, the federal government is counting on tax collections, a $212 billion money stability and extraordinary money administration measures to proceed funding authorities operations.

“As the federal government’s cash flow is subject to unavoidable variability, I will continue to update Congress as more information becomes available,” Yellen stated in her letter.

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