WASHINGTON--U.S. Treasury Secretary Janet Yellen on Monday again urged Congress to raise the national debt limit through bipartisan action, as more Republicans balked at the prospect of raising the federal government's borrowing capability.
Yellen, in another notice to U.S. lawmakers, warned of economic harm if the debt ceiling is not raised or suspended before the nation's borrowing capability is exhausted in October. Failure to increase or suspend the statutory debt limit - now at $28.5 trillion - could trigger another federal government shutdown or a debt default.
Congress should act "as it has in the past to protect the full faith and credit of the United States," Yellen said in a statement released by the Treasury Department, calling it "a shared responsibility."
"Failure to meet those obligations would cause irreparable harm to the U.S. economy and the livelihoods of all Americans," she added.
Yellen, who pressed U.S. lawmakers in a letter last month and in a hearing in June, said the majority of the debt had accrued prior to the Biden administration and that Republicans and Democrats had previously worked together multiple times to address the borrowing issue.
But Republicans, who lost the White House in the November 2020 election and control of the U.S. Senate two months later, have sought to tie the issue to President Joe Biden and his fellow Democrats' COVID-19 pandemic spending and plans to expand social benefits, which they have denounced. Some have also balked at the cost of a bipartisan infrastructure bill, which is expected to pass by Tuesday morning with some Republican votes.
Senate Republican Leader Mitch McConnell last week said Democrats, who have effective control of the chamber, should instead address the debt limit themselves. "They deserve to have total ownership of that decision," he said on the Senate floor on Monday.
Republican Senator Rob Portman echoed that sentiment in a separate CNBC interview, tying it to the $1.9 trillion COVID-19 relief package that passed in March and the roughly $3.5 trillion social spending plan proposed by Democrats. "They're the ones who have pushed this debt to the point where it is really getting dangerously high," Portman added, saying Democrats could use a process known as reconciliation to address the debt limit without Republican votes.
The national debt ballooned by almost 40% to nearly $28 trillion under former President Donald Trump, fueled by the passage of tax cuts in 2017 and a flood of spending in 2020 to counter the economic hit from the coronavirus pandemic. Republican Senator Rick Scott told the "Fox News Sunday" programme that his party would not raise the debt ceiling "without structural change" but gave no details.
Yellen has called Oct. 1 a critical date for U.S. government cash flows, because of some $150 billion in payments due on the first day of the 2022 fiscal year, including some investments in military pension programs.
Meanwhile, the Treasury Department has already announced measures such as suspending investments in employee health benefits funds to preserve its borrowing authority.
