Treasury Secretary Janet Yellen on Tuesday told lawmakers that she now estimates that the U.S. will reach its debt limit on Dec. 15, almost two weeks later than her initial forecast of Dec. 3.
Those additional 12 days would offer Congress more time to strike a deal on how to lift or suspend the debt ceiling. If lawmakers fail to do so before the so-called drop-dead date, the U.S. government would default for the first time ever.
In a letter to House Speaker Nancy Pelosi, D-Calif., Yellen explained that her revised estimate is in part the result of President Joe Biden’s enactment of the $1 trillion infrastructure plan earlier this week.
“Yesterday, the President signed the Infrastructure Investment and Jobs Act, which appropriates $118 billion for the Highway Trust Fund,” she wrote. “These funds must be transferred into the Highway Trust Fund within one month after the enactment of the legislation, and the transfer will be completed on December 15.”
“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,” she added.
Yellen has said she expects a default would lead to a recession and jeopardize the U.S. dollar’s role as the globe’s reserve currency.
Congress passed a stopgap debt ceiling increase in early October. It’s likely Democrats, who have razor-thin majorities in both houses of Congress, will have to pass the next increase along party lines.
The debt ceiling is just part of the Democrats’ monumental to-do list before the end of the year.
The House is expected to vote on Biden’s nearly $1.8 trillion social safety net and climate plan this week, before Congress heads to Thanksgiving recess. Senate Majority Leader Chuck Schumer said on Tuesday that his chamber aims to pass the measure, known as the Build Back Better Act, before Christmas.