https://www.cnbc.com/2021/07/23/yellen-urges-congress-to-raise-debt-limit-by-aug-2-or-treasury-will-take-extraordinary-measures-to-prevent-default.html Skip Navigation logo logo Markets * Pre-Markets * U.S. Markets * Currencies * Cryptocurrency * Futures & Commodities * Bonds * Funds & ETFs Business * Economy * Finance * Health & Science * Media * Real Estate * Energy * Environment * Transportation * Industrials * Retail * Wealth * Life * Small Business Investing * Invest In You * Personal Finance * Fintech * Financial Advisors * Trading Nation * Options Action * ETF Street * Buffett Archive * Earnings * Trader Talk Tech * Cybersecurity * Enterprise * Internet * Media * Mobile * Social Media * Venture Capital * Tech Guide Politics * White House * Policy * Defense * Congress * Finding Solutions CNBC TV * Live TV * Live Audio * Business Day Shows * The News with Shepard Smith * Entertainment Shows * Full Episodes * Latest Video * Top Video * CEO Interviews * CNBC Documentaries * CNBC Podcasts * CNBC World * Digital Originals * Live TV Schedule Watchlist PRO * Pro News * Pro Live * Subscribe * Sign In Menu * Make It * USA * INTL * watchlive Search quotes, news & videos SIGN IN logo Markets * Pre-Markets * U.S. Markets * Currencies * Cryptocurrency * Futures & Commodities * Bonds * Funds & ETFs Business * Economy * Finance * Health & Science * Media * Real Estate * Energy * Environment * Transportation * Industrials * Retail * Wealth * Life * Small Business Investing * Invest In You * Personal Finance * Fintech * Financial Advisors * Trading Nation * Options Action * ETF Street * Buffett Archive * Earnings * Trader Talk Tech * Cybersecurity * Enterprise * Internet * Media * Mobile * Social Media * Venture Capital * Tech Guide Politics * White House * Policy * Defense * Congress * Finding Solutions CNBC TV * Live TV * Live Audio * Business Day Shows * The News with Shepard Smith * Entertainment Shows * Full Episodes * Latest Video * Top Video * CEO Interviews * CNBC Documentaries * CNBC Podcasts * CNBC World * Digital Originals * Live TV Schedule Watchlist PRO * Pro News * Pro Live * Subscribe * Sign In Menu Politics Yellen urges Congress to raise or suspend the debt limit by Aug. 2 Published Fri, Jul 23 20211:14 PM EDTUpdated 4 Hours Ago Thomas Franck@tomwfranck ShareShare Article via FacebookShare Article via TwitterShare Article via LinkedInShare Article via Email Key Points * Treasury Secretary Janet Yellen warned Congress that her department will need to start "extraordinary measures" on Aug. 2 if lawmakers don't raise the debt ceiling. * In a letter to House Speaker Nancy Pelosi, D-Calif., Yellen put lawmakers on notice that the Treasury Department soon suspend the sale of state and local bonds. * While the extraordinary measures have been used in the past to prevent a U.S. default, it's unclear how long Yellen's emergency capital will last given unprecedented stimulus to combat Covid-19. VIDEO2:2002:20 Treasury Secretary Yellen warns U.S. will hit debt limit August 1st Closing Bell Treasury Secretary Janet Yellen on Friday warned Congress that her department will need to embark on "extraordinary measures" on Aug. 2 to prevent the U.S. government from defaulting if lawmakers are unable to strike a deal to raise or extend the debt ceiling. In a letter to House Speaker Nancy Pelosi, D-Calif., Yellen put lawmakers on notice that the Treasury Department will at the end of July suspend the sale of bonds, the avenue by which the U.S. finances its debt obligations. After Aug. 2 and barring a debt limit agreement, the Treasury will start taking "extraordinary measures" to pay for Congress' legal and financial obligations, a temporary fix that allows the secretary to tap additional government accounts for a period of weeks. "The period of time that extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the challenges of forecasting the payments and receipts of the U.S. government months into the future, exacerbated by the heightened uncertainty in payments and receipts related to the economic impact of the pandemic," Yellen told Pelosi in a letter. The message between the Treasury secretary and the House speaker is a required formality should the outstanding debt of the U.S. near its statutory limit. While the extraordinary measures have been deployed in the past to prevent a default, it's unclear how long Yellen's emergency capital will last in the face of unprecedented stimulus efforts sparked by the Covid-19 crisis. VIDEO1:0601:06 Debt limit likely to be hit in October or November unless raised, says CBO Power Lunch While the United States has never defaulted on its debt, recent history shows that getting uncomfortably close to it can create chaos. In 2011, House Republicans' refusal to pass a debt ceiling increase led to a downgrade of the U.S. sovereign credit rating that upset financial markets. Economists say default, though extremely unlikely, would be a catastrophic event and would pose a significant threat to several sectors of the American economy. Asked about Yellen's letter, White House press secretary Jen Psaki stressed that the communication should be taken in context and noted that similar letters have been sent in prior administrations. The letter is "standard practice for Treasury secretaries when a debt limit is going to be reimposed," Psaki said Friday afternoon. "During the previous two administrations, the Treasury secretary sent nearly 50 letters to the Hill on the debt limit, some of which were very similar, in wording and asks and updates, to this letter." Despite the administration's calm, it is virtually certain Congress will breach that Aug. 2 deadline with Democrats and Republicans gridlocked on several key pieces of legislation. Perhaps most notable is that Senate Majority Leader Chuck Schumer, D-N.Y., remains far away from compromise over a trillion-dollar physical infrastructure deal. House Democrats insist that they won't pass a bill to improve the nation's roads, bridges, broadband and waterways without a separate piece of legislation modeled after President Joe Biden's American Families Plan to support paid worker leave, labor education and other programs. For his part, Senate Minority Leader Mitch McConnell, R-Ky., told Punchbowl News earlier this month that he "can't imagine a single Republican" voting to raise the debt limit amid Democrats' "free-for-all for taxes and spending." -- CNBC's Kevin Breuninger contributed reporting. logo * Subscribe to CNBC PRO * Licensing & Reprints * CNBC Councils * Supply Chain Values * CNBC on Peacock * Advertise With Us * Join the CNBC Panel * Digital Products * News Releases * Closed Captioning * Corrections * About CNBC * Internships * Site Map * Podcasts * Ad Choices * Careers * Help * Contact * * * * * * * News Tips Got a confidential news tip? We want to hear from you. Get In Touch CNBC Newsletters Sign up for free newsletters and get more CNBC delivered to your inbox Sign Up Now Get this delivered to your inbox, and more info about our products and services. Privacy Policy|Do Not Sell My Personal Information|CA Notice|Terms of Service (c) 2021 CNBC LLC. All Rights Reserved. A Division of NBCUniversal Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Market Data Terms of Use and Disclaimers Data also provided by Reuters comscore