WASHINGTON—The U.S. could run out of room to keep paying the government’s bills some time during Congress’s August recess unless lawmakers raise or suspend the federal borrowing limit before then, Treasury Secretary Janet Yellen said Wednesday.
Congress in 2019 suspended the borrowing limit, or debt ceiling, through July 31, 2021. After that, the Treasury Department won’t be able to raise additional cash through the sale of government securities and would need to deploy emergency measures to keep paying the government’s obligations, as it has in the past.
Testifying before a Senate panel, Ms. Yellen emphasized that the pandemic has created uncertainty around the size and timing of government payments, making it difficult to estimate when the Treasury might exhaust those measures.
“It’s possible that we could reach that point while Congress is out in August,” she said, referring to lawmakers’ annual summer recess. “I would really urge prompt action on raising the limit or suspending it.”
Without congressional action to suspend or raise the limit after July 31, the government could begin to miss payments on its obligations, triggering a default on government debt, which Ms. Yellen called unthinkable.