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U.S. Treasury Secretary Janet Yellen during a press conference at the Capitol on Sept. 23. Photo: Sarah Silbiger/Bloomberg via Getty Images

Treasury Secretary Janet Yellen told House Speaker Nancy Pelosi in a letter Tuesday that the United States will likely begin to default on its loans shortly after Oct. 18 if Congress fails to raise or suspend the debt ceiling by then.

Why it matters: The U.S. has never defaulted on its financial obligations, and Yellen has previously warned that doing so would cause irreparable damage to the U.S. economy and global financial markets.

  • At the same time, funding for the federal government expires on Sept. 30.

Driving the news: Senate Republicans, led by Minority Leader Mitch McConnell, blocked a House-passed bill on Monday that would have funded the U.S. government through Dec. 3 and raise the debt limit, avoiding a potential default.

  • McConnell has repeatedly said that Republicans will not vote for raising the debt ceiling because it will only promote more government spending.
  • Democrats and Republicans worked together to raise the borrowing limit three times throughout the Trump administration and several times in other previous administrations.

Because of Republicans' refusal to vote for a debt ceiling raise, Democrats will likely have to include the increase in their reconciliation package, which can be passed without Republican votes, Axios' Alayna Treene reports.

  • Yellen in the past opposed a debt ceiling increase through a budget reconciliation package, arguing that the raise should be bipartisan and passed through regular order.

What they're saying: "We now estimate that Treasury is likely to exhaust its extraordinary measures if Congress has not acted to raise or suspend the debt limit by October 18. At that point, we expect Treasury would be left with very limited resources that would be depleted quickly," Yellen said in her letter to Pelosi.

  • "It is uncertain whether we could continue to meet all the nation's commitments after that date. While this is our best estimate, the federal government's cash flows are subject to unavoidable variability," she added.
  • "As a result, it is important to remember that estimates regarding how long our remaining extraordinary measures and cash may last can unpredictably shift forward or backward. This uncertainty underscores the critical importance of not waiting to raise or suspend the debt limit."

Our thought bubble via Axios' Hans Nichols: Oct. 18 is a remarkably precise date and pulls the doomsday forward — by at least a week — from Treasury estimates earlier this month.

  • Yellen was always bound to get more certainty on when Treasury would run out of money the closer that date arrived and now she's all but screaming that it will come in just 20 days. 

The bottom line: "The full faith and credit of the United States should not be put at risk," Yellen wrote.

Go deeper: The Democrats' debt dilemma

Go deeper

Oct 13, 2021 - Politics & Policy

First look: Progressives plan rally to keep paid family leave in plan

Photo: Al Drago-Pool/Getty Images

Progressive groups will rally Thursday on the Ellipse to press President Biden and Congress to keep paid family medical leave in the social spending package that ultimately gets a vote, Axios has learned.

The big picture: Look for these and other advocates to step up their public engagement to keep their cherished programs from being axed, as congressional negotiators trim the size of Democrats' budget reconciliation package to roughly $2 trillion, from a $3.5 trillion starting point.

Ina Fried, author of Login
14 mins ago - Technology

Intel CEO sees making own chips as a matter of national security

Pat Gelsinger. Photo: Axios on HBO

Intel CEO Pat Gelsinger is putting the pressure on the U.S. government to help subsidize chip manufacturing, insisting the current reliance on plants in Taiwan and Korea as "geopolitically unstable."

Why it matters: There is bipartisan support for funding the domestic semiconductor industry, but Congress has yet to sign the check. The Senate has passed the CHIPS Act that includes $52 billion in semiconductor investment, but it has yet to pass the House.

Updated 17 mins ago - World

17 U.S. and Canadian missionaries kidnapped in Haiti

Haitian soldiers guard the public prosecutor's office in Port-au-Prince this month. Photo: Richard Pierrin/AFP via Getty Images

Children are among a group of 17 missionaries kidnapped in Port-au-Prince, Haiti, per a statement from Christian Aid Ministries Sunday.

The latest: "The group of 16 U.S citizens and one Canadian citizen includes five men, seven women, and five children," the Ohio-based group said. Haitian police inspector Frantz Champagne on Sunday identified the 400 Mawozo gang as the group responsible, in a statement to AP.