Treasury Secretary Janet Yellen on Wednesday pleaded with lawmakers to raise the federal debt ceiling to stave off an “unthinkable” first-ever default on U.S. debt obligations that could spark a financial crisis. Yellen made the remarks in testimony before a Senate Appropriations subcommittee, urging lawmakers to raise the legal cap on how much the federal government can owe, while warning that, if they don’t agree, there could be “absolutely catastrophic economic consequences.” Congress in 2019 suspended the borrowing limit through July 31, 2021. If the debt ceiling cap suspension is allowed to lapse, the Treasury Department will be unable to raise additional funds by selling government securities and will have to resort to emergency measures to keep meeting its debt obligations. In the past, the Treasury has resorted to extraordinary measures like suspending contributions to government employee pension funds to maintain its ability to keep making debt payments. But spending on COVID-19 …
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