London Daily

Focus on the big picture.
Saturday, Jul 26, 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

0:00
0:00
Close
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
×