Arab Press

بالشعب و للشعب
Saturday, Jul 12, 2025

US Government May Run Out Of Funds By October Unless Debt Limit Raised

US Government May Run Out Of Funds By October Unless Debt Limit Raised

Republicans in the US Senate have stubbornly refused to support an increase or suspension of the debt ceiling, despite having pressed for it under their party's former president Donald Trump

The US Treasury is likely to exhaust measures to keep funding the government on October 18, and will run out of cash unless Congress raises the federal borrowing cap, Treasury Secretary Janet Yellen warned Tuesday.

After the date, "Treasury would be left with very limited resources that would be depleted quickly. It is uncertain whether we could continue to meet all the nation's commitments after that date," she said in a letter to congressional leaders.

Republicans in the US Senate have stubbornly refused to support an increase or suspension of the debt ceiling, despite having pressed for it under their party's former president Donald Trump.

On Monday, they blocked a Democratic effort to approve a 14-month suspension together with a temporary budget.

Yellen repeated her call in her appearance before the Senate Banking Committee.

"It is imperative that Congress swiftly addresses the debt limit. If it does not, America would default for the first time in history," Yellen said in her prepared testimony.

The House passed a measure last week to keep the government open until December 3 while they continue debate on a major 10-year social spending package, but the evenly-divided Senate has thus far rejected beginning debate on the bill.

Without an increase, the government would be unable to pay salaries of public workers, send payments to retirees, or service the nation's debt.

Catastrophe


Raising the debt limit does not increase spending, but simply allows Treasury to finance projects already approved by Congress, including trillions of dollars in aid rolled out during the Covid-19 pandemic.

Yellen said the spending helped support the US recovery, which "is stronger than those of other wealthy nations."

But failure to raise the debt ceiling -- which has been done 78 times since 1960, nearly always on a bipartisan basis -- could create "a catastrophic event for our economy."

"We must address this issue to honor commitments made by this -- and prior -- Congresses, including those made to address the health and economic impact of the pandemic," Yellen said in her testimony.

Federal Reserve Chair Jerome Powell, who also is testifying at the hearing, also has warned of dire consequences, as have a series of former Treasury secretaries and business groups.

And in her latest letter to lawmakers, Yellen again warned that prompt approval is critical since "waiting until the last minute can cause serious harm to business and consumer confidence, raise borrowing costs for taxpayers and negatively impact the credit rating of the United States for years to come."

"Failure to act promptly could also result in substantial disruptions to financial markets, as heightened uncertainty can exacerbate volatility and erode investor confidence," she said.

Raising the debt ceiling has been a contentious issue in Congress for the past several years, and a 2011 standoff caused S&P Global Ratings to downgrade US sovereign debt from its coveted AAA rating.

Senate Republican leader Mitch McConnell has used the debt limit as a political bludgeon to protest President Joe Biden's spending plans, and says Democrats must raise the ceiling without opposition support.

Under Trump, the ceiling was suspended for two years on a bipartisan basis after McConnell at the time argued that failing to do so "would be a disaster."

The cap was reinstated on August 1 with the country's debt at $28.4 trillion.

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
AI Raises Alarms Over Long-Term Job Security
Russia Formally Recognizes Taliban Government in Afghanistan
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Mediators Edge Closer to Israel-Hamas Ceasefire Agreement
Germany Seeks Taliban Deal to Deport Afghan Migrants
Emirates Airline Expands Market Share with New $20 Million Campaign
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Trump Asserts Readiness for Further Strikes on Iran Amid Nuclear Tensions
Qatar Airways Clears Backlog of Passengers Following Missile Threats
Iran's Parliament Votes to Suspend Cooperation with Nuclear Watchdog
Trump Announces Upcoming US-Iran Meeting Amid Controversial Airstrikes
Trump Moves to Reshape Middle East Following Israel-Iran Conflict
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
“You Have 12 Hours to Flee”: Israeli Threat Campaign Targets Surviving Iranian Officials
Oman Set to Introduce Personal Income Tax, First in Gulf
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
G7 Leaders Fail to Reach Consensus on Key Global Issues
Mass exodus in Tehran as millions try to flee following Trump’s evacuation order
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Netanyahu Signals Potential Regime Change in Iran
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
Iran Conducts Ballistic Missile Launches Amid Heightened Tensions with Israel
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
Shock Within Iran’s Leadership: Khamenei’s Failed Plan to Launch 1,000 Missiles Against Israel
UK Deploys Jets to Middle East Amid Rising Tensions
Exiled Iranian Prince Reza Pahlavi Urges Overthrow of Khamenei Regime
×