By Fatima Hussein and Kevin Freking, Associated Press
Washington (AP) – The United States is on the right track to run out of money to pay its bills in August without action of the congress, warned the secretary of the Treasury Scott Bessent on Friday.
He calls on the congress to lift or suspend the debt ceiling by mid-July.
“A failure to suspend or increase the limit of the debt would wreak havoc on our financial system and reduce the position of security and world leadership in America,” Bessent in the letter to the president of the Mike Johnson chamber. “Previous episodes have shown that waiting for the last minute to suspend or increase the limit of debt can have serious harmful consequences for financial markets, businesses and the federal government.”
Earlier this week, Bessent said twice in front of the congress committees that the Treasury debt ceiling is “on the warning track”.
After the debt limit was restored in January, the secretary of the Treasury, Janet Yellen – in one of her last acts in the post – said that the agency would institute “extraordinary measures” intended to prevent the United States from reaching the debt ceiling.
Since then, the Treasury Department has ceased to pay certain accounts, including a series of federal retirement and disability funds of workers, to compensate for the money deficit. Bessent continued to inform the Congress of the use of extraordinary measures in order to prevent a violation of the debt ceiling. In his last letter, Bessent awarded the deadline for August, known as “X-Date”, partly to the receipts for the last bid season.
An analysis of the Bipartisan Policy Center published in March said that the United States could lack cash in mid-July if the congress had not raised or suspended the limit of the country’s debt.
President Donald Trump had previously demanded that an increased provision or suspends the debt limit – something that his own republican party is resistant regularly – be included in the legislation to avoid the last potential closure of the government under his Democratic predecessor, President Joe Biden.
“Everything else is a betrayal of our country,” Trump said in a statement in December. This agreement ultimately did not address the limit of debt.
The letter to Johnson comes as the Republicans consider a reduction in massive tax and a border security package which includes an increase in the debt limit. Bessent’s request could give GOP legislators a greater incentive to reach an agreement.
Originally published:
California Daily Newspapers
