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U.S. Treasury’s Yellen extends debt limit default deadline to Dec. 15 -Breaking


© Reuters. FILE PHOTO: Janet Yellen, Treasury Secretary, attends the hearing of House Financial Services Committee in Washington, U.S.A, September 30, 2021. Al Drago/Pool via REUTERS

By David Lawder

WASHINGTON, (Reuters) – U.S. Treasury secretary Janet Yellen extended Tuesday’s deadline for a possible U.S. default to December 15 from December 3. This gives Congress additional time to increase the federal debt limit as legislators also examine a huge social spending bill and climate legislation.

In a letter addressed to Congress leaders, Yellen stated that the adjustment was “based upon our most recent information”, a reference to Treasury cash flow and tax collection data.

The Treasury could make $118 million transfer to Highway Trust Fund, which was required by President Joe Biden on Monday. However, the transfer would not be allowed to count toward the debt ceiling because it would only be used for non-marketable Treasury securities.

“While my confidence is high that Treasury will be able finance the U.S. through December 15th and to complete the Highway Trust Fund Investment, there are some scenarios where Treasury may not have sufficient remaining resources to continue funding the U.S. operations after this date,” Yellen explained.

To preserve the United States’ full faith, credit and ability to repay its debts, she reiterated her appeal to Congress to increase or suspend the limit on the national debt “as quickly as possible”.

This new estimate allows Democrats to have a little more room in Congress as they try to pass the $1.75 trillion bill to give new tax breaks to energy and to fund benefits such as universal preschool, child tax credit and child care.

On Tuesday, Senate Majority Leader Chuck Schumer claimed that Senate Democrats wanted to pass the BuildBack Better legislation before Christmas. However this goal was scuppered by progressive Democrats and centrist Democrats.

Democrats plan to pass spending legislation without Republican support. But, Republicans vow to fight any increase in the debt limit.

“As the federal government’s cash flow is subject to unavoidable variability, I will continue to update Congress as more information becomes available,” Yellen said.

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