Treasury Secretary Janet Yellen warned Congress that the federal government will suspend certain investments until Congress passes a long-term extension of the borrowing limit.
In a letter to House Speaker Nancy Pelosi, Yellen said the Treasury “will need to use certain extraordinary measures through December 3,” which is when a short-term debt limit increase will expire.
“It is imperative that Congress act to increase or suspend the debt limit in a way that provides longer-term certainty that the government will satisfy all its obligations,” Yellen wrote to Pelosi, a California Democrat.
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Republicans are refusing to support a long-term debt limit increase, which will make it impossible to pass the measure in the Senate, where 60 votes are needed to advance legislation. Democrats control only 50 Senate seats.
Earlier this month, Senate Minority Leader Mitch McConnell, a Kentucky Republican, agreed to a short-term extension, arguing it will provide Democrats sufficient time to use a budgetary tactic that will allow them to pass a long-term increase without needing any GOP votes.
While the Dec. 3 deadline is looming, Democrats are refusing to go it alone and are insisting Republicans provide the votes to pass a debt limit increase that would last through 2022.
Yellen said that in the meantime, she is suspending some Civil Service Retirement and Disability Fund investments, as well as some Postal Service Retiree Health Benefits investments.
“Federal retirees and employees will be unaffected by these actions,” Yellen wrote.
Republicans say they won’t provide the votes to increase the debt ceiling because Democrats are acting recklessly by moving to jam through a massive social welfare spending package that is likely to cost around $2 trillion.
Republicans say Democratic spending is fueling inflation and hurting the economy.
“The truth is, working families are being crushed by the crises created by the Biden Administration,” said Rep. Jason Smith of Missouri, the top Republican on the House Budget Committee. “Republicans will not co-sign a loan for an agenda that only makes them worse.”
Democrats say the debt accrued thanks to Trump-era tax cuts that reduced revenue to the Treasury, as well as COVID-19 relief packages both Republicans and Democrats voted to pass in Congress.
Pelosi said Democrats are trying to “have bipartisanship” on a long-term increase and warned that if the deadline isn’t met, it will have a devastating impact on the economy.
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“If we don’t lift the ceiling, it could be a loss of six million jobs, $15 trillion in household wealth, and drastically increase of car loans, mortgages, student loans, credit cards, and other borrowing,” Pelosi warned. “Domestically, it will have a tremendous impact.”
