There is a risk that the US treasury will run out of money in October

If U.S. lawmakers do not set a federal limit on how much money the US can borrow, there is a risk that the state treasury will run out of money in October. In a letter to congressional representatives, Finance Minister Janet Yellen warned against this. The increase could be blocked by Republicans who reject President Joe Biden's administration's plans for massive social spending. The possibility of "extraordinary measures", by which the US Treasury Department has been providing sufficient funds for the government since the beginning of August, will be exhausted next month, according to Yellen. The minister wrote this in a letter to lawmakers from Congress. She added that the exact date when this will happen is not yet known. "Once all available measures and cash are fully exhausted, the United States would not be able to meet its commitments for the first time in history," Yellen wrote. Raising the debt limit has become a routine matter in Congress in the past, although it has been delayed until the last minute in the Democrats' political struggle with Republicans. "We have learned from the past that waiting at the last minute to suspend or increase the debt limit can seriously undermine business and consumer confidence, increase taxpayers' short-term borrowing costs and negatively affect the US credit rating," Yellen warned in the letter. Without raising the limit, the US Treasury Department will not be able to raise money by issuing bonds. With limited incomes, they would have to choose between paying the salaries of civil servants, social benefits and paying interest on the state debt. If it were decided not to pay interest, it would essentially mean state bankruptcy. The ruling Democrats need 60 votes in the Senate to raise the debt limit, but they only have 50 seats in the upper house of the US Congress. And almost all Republican senators intend to vote against, Bloomberg said. The reason is their opposition to the upcoming record package worth $ 3.5 trillion, which the Biden administration wants to address climate change, strengthen education or expand social services for the elderly and children. "I can't imagine any Republican voting to raise the limit in this situation," Senate Republican Chief Mitch McConnell said in July. By contrast, President Biden said in early August that US Republicans would not go bankrupt. Democratic leaders in Congress, Nancy Pelosi and Charles Schumer, spoke last week about "different options" for raising the debt limit, but did not specify either. The struggle over the debt limit is often downplayed as a political theater, writes the Financial Times. So far, the necessary changes have always been approved. The limit has existed since 1917 and has been increased more than 100 times since then, mostly without major delays. One of the few exceptions was the 2011 dispute, which caused Standard & Poor’s to downgrade the United States.