Yellen urges Congress to act on debt ceiling

Yellen has previously warned that the tipping point could be hit as soon as mid-September, and the Congressional Budget Office has said the Treasury could run out of money in October or November.

Republicans have balked at raising the debt ceiling amid qualms with President Joe Biden’s pricey agenda, and Senate Minority Leader Mitch McConnell has said not to expect GOP votes to pass an increase of the debt limit. Democrats have noted that the GOP was far less hawkish about the debt during the Trump administrations, setting the stage for a standoff with the nation’s credit rating in the balance.

Senate Democrats on Monday unveiled a budget blueprint that designed to unlock the ability to pass a $3.5 trillion package of social spending proposals on a party-line vote by bypassing the filibuster.

But notably the debt ceiling issue was not included in the document, which had been discussed as a potential vehicle for such an action, though Democrats previously indicated that they were unlikely to go down that path. Excluding it from the budget resolution is a sign that Senate Democrats do not intend to address the issue on their own through reconciliation, and thus will need Republican support.

POLITICO reported last week that Democrats are instead eyeing a short-term funding bill to avert a government shutdown in the fall as an opportunity to act on the debt limit.