Treasury Secretary Yellen Says Uncertainty Exists Over Cash Balance On Dec. 15
November 30, 2021—The U.S. government breached its $28.9 trillion debt limit and is using extraordinary measures to borrow money to pay its bills, the Congressional Budget Office reported today. The CBO outlined the extraordinary measures the government is currently taking to stay afloat.
The U.S. government has “no room to borrow under its standard operating procedures,” the CBO said. If the Treasury transfers $118 billion to the Highway Trust Fund on December 15, as the recently passed Infrastructure Investment and Jobs Act directs it to do, it is likely to run out of cash.
Running on Empty
If the U.S. government runs out of options, it “would ultimately lead to delays of payments for some government activities, a default on the government’s debt obligations, or both,” the CBO reported. It would be an astonishing event if it occurred—one that would have disastrous consequences for the global economy.
However, the CBO said, the Treasury Secretary might have the authority to defer those payments. Still, the outlook for December is “especially uncertain,” the CBO said, given unknowns related to revenue collection for the remainder of the year in light of the coronavirus pandemic.
In testimony today to the Senate Banking Committee, Treasury Secretary Janet Yellen said December 15 is a key date due to a funding requirement in the recently-passed infrastructure bill. (Also mentioned above.)
“I have a high degree of confidence that Treasury will be able to finance the U.S. government through Dec. 15. But there would be scenarios in which Treasury would not have sufficient funds to continue to finance the operations beyond that date,” Yellen said. “I didn’t say there was ‘no way’ we could make it past Dec. 15. There’s a range. There’s uncertainty about what our cash balance will be.”
She testified today at the hearing along with Federal Reserve Chairman Jerome Powell.
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