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Treasury secretary urges Congress to act on debt ceiling or risk ‘irreparable harm’ to economy

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Treasury Secretary Janet Yellen prepares to speak during a meeting of eurogroup finance ministers in Brussels on July 12, 2021. (Photo by AP)

US Treasury Secretary Janet Yellen has urged Congress to act on the nation’s creeping borrowing limit, warning that failure to raise the debt ceiling would "cause irreparable harm" to the economy.

“In recent years Congress has addressed the debt limit through regular order, with broad bipartisan support,” Yellen said in a statement on Monday.

“This is a shared responsibility, and I urge Congress to come together on a bipartisan basis as it has in the past to protect the full faith and credit of the United States,” she added.

Yellen’s statement, the latest in a series of warnings in recent weeks, comes just over a week after the two-year deal to suspend the debt ceiling expired. Right now, the ceiling is at about $28.4 trillion, meaning the US government can legally owe that much debt.

The Treasury Department is now using what it refers to as a series of “extraordinary measures” to prevent the United States from defaulting on its obligations.

Republicans in Congress have refused to agree to raise the debt ceiling as they clash with President Joe Biden over his costly policy agenda.

Senate Minority Leader Mitch McConnell has told the administration not to expect any Republican votes to pass an increase of the debt limit.

“If our colleagues want to ram through yet another reckless tax and spending spree without our input, if they want all this spending and debt to be their signature legacy, they should leap at the chance to own every bit of it," the Republican leader said in a speech on the Senate floor last week.

Democrats have accused the GOP of playing politics with the nation’s borrowing authority, noting that Republicans were far less rigid on the issue during the administration of former President Donald Trump.

Congress raised or suspended the debt ceiling three times under the Trump administration.

Meanwhile, Senate Democrats on Monday unveiled their $3.5 trillion budget package of social spending proposals, which they expect to pass without any Republican votes through the budget reconciliation process.

A reconciliation bill cannot be filibustered and requires only a simple majority of votes to pass.

Republicans have broadly rejected plans for additional spending and have accused Democrats of undermining bipartisan support for other critical economic issues, such as increasing the debt ceiling.

Democrats did not include a debt limit increase in their budget framework, meaning they will have to find some other way to address the issue.

Washington is now facing an intense partisan brawl as it seeks to head off another embarrassing US default on its debts. 

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