Janet Yellen Says U.S. Could Run Out Of Cash To Pay Its Bills In Less Than 3 Weeks

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Treasury Secretary Janet Yellen, left, and Federal Reserve Chairman Jerome Powell appear before a Senate Banking, Housing and Urban Affairs Committee hearing on Sept. 28. Yellen warned the government would run out of cash to pay its bills by Oct. 18 unless Congress raises the so-called debt ceiling.

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Sen. John Kennedy, R-La., called on Democrats to raise the debt ceiling on their own at a Senate hearing with Yellen and Powell. Kennedy said Democrats can use a process called reconciliation, but Democrats have pushed back hard, saying more than a quarter of the debt now owed by the government was accumulated during the Trump administration.

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Kevin Dietsch/Getty Images

Sen. John Kennedy, R-La., called on Democrats to raise the debt ceiling on their own at a Senate hearing with Yellen and Powell. Kennedy said Democrats can use a process called reconciliation, but Democrats have pushed back hard, saying more than a quarter of the debt now owed by the government was accumulated during the Trump administration.

Kevin Dietsch/Getty Images

Democrats pushed back, noting that more than a quarter of the federal debt that the government needs to pay was accumulated during the Trump administration.

«I wonder if Secretary Yellen takes you up on that offer to go get a cocktail if you would pay or you’d skip out on paying the bill and expect Secretary Yellen to pay,» committee chairman Sherrod Brown, D-Ohio, asked Kennedy.

There were signs the political stalemate is making investors nervous at a time when high inflation and the continuing pandemic are already hitting markets. Stocks fell sharply Tuesday while the yield on government bonds increased.

Powell pressed on Fed’s stock trading controversy

Federal Reserve Chairman Jerome Powell, who also appeared before the committee, echoed Yellen on the importance of avoiding a government default.

Powell was also pressed about the recent revelations that two regional Federal Reserve bank presidents actively traded in securities last year, while the central bank was deeply involved in financial markets.

Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren both announced their retirements on Monday. While both men have defended their trading as in compliance with the Fed’s ethics rules, Powell acknowledged those rules need to be tightened

«The appearance is just obviously unacceptable,» Powell said. «Our need to sustain the public’s trust is the essence of our work.»

  • Treasury Secretary Janet Yellen
  • Jerome Powell
  • government default
  • debt ceiling
  • Federal Reserve

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