US Treasury cash would not last long beyond December 3

US Treasury Secretary Janet Yellen said she will update Congress “within the next two days”On how long legislators have to raise or suspend the debt limit before the government runs out of cash.

“We may be able to make it through December 3, we may have the resources to make it, but not much longer“Yellen said in an interview with National Public Radio that was recorded Monday.

Since last month, the Treasury has been using so-called extraordinary measures to help avoid running out of cash. The Department said earlier this month that it had spent more than $ 182 billion of about $ 369 billion in available cash through such measures.

Lawmakers enacted short-term support for the debt cap last month, aiming to give enough room to coincide with another deadline, Dec. 3, for regular annual funding from federal government agencies. At the time, Yellen said the legislation would allow the government to continue paying its commitments until December 3. Dates are subject to change based on the Treasury Department’s income and expense streams.

“Soon I will issue a new guide on what we have observed since that time regarding how long they can lastYellen said.

Bond reaction

The returns on the instruments of the treasure due at year-end rose after Yellen’s comments and investors demanded slightly higher interest rates for maturities around December 28-30.

Republicans are trying to force Democrats to raise the cap themselves, after a group of them voted to approve the $ 480 billion short-term support in October. Democrats have insisted that a longer-term resolution be enacted with bipartisan support, as has been done in the past.

Yes OK Yellen has repeatedly called for a bipartisan vote to address the debt cap, has also suggested in recent weeks that Democrats consider raising the cap themselves through the reconciliation process, which bypasses Senate filibuster, and, hence the need for the support of the Republican Party.

Default risk

If he treasure runs out of cash, the United States government could default on its financial obligations. Yellen He warned that federal employees and contractors would go unpaid and Social Security checks would stop, among other things. Unless their payments were prioritized, investors in Treasury securities would not receive interest payments or recoup their principal in bills, notes, or maturing bonds.

Yellen and the chairman of the Federal Reserve, Jerome PowellThey, along with many other economists, have warned that even a temporary default could cause chaos in credit markets, increase America’s borrowing costs for an extended period, and damage the country’s credibility globally. Yellen has repeatedly said a recession is coming.

Meanwhile, Congress also faces a deadline in the coming weeks to avoid a federal government shutdown. The agencies have been funded through an interim temporary appropriations bill since the start of the fiscal year on Oct. 1, and another alleged continuing resolution is likely to follow after that bill’s expiration on Dec.3.