Bonds

Congress faces December crunch for funding, debt limit, Build Back Better

The House is expected to unveil as soon Tuesday a measure to extend government funding into early 2022 as current funding is set to expire Friday.

Treasury Secretary Janet Yellen separately has warned the U.S. may hit its debt ceiling as soon as Dec. 15, putting pressure on lawmakers to raise or suspending the ceiling by then to avoid a catastrophic U.S. default.

And Senate Majority Leader Chuck Schumer has said he wants the Senate to pass President Joe Biden’s $1.7 trillion Build Back Better bill before the end of the year. The House passed the measure on Nov. 19.

Senate Majority Leader Chuck Schumer has said he wants to pass President Joe Biden’s Build Back Better package before Christmas.

Bloomberg News

It’s set to be a busy pre-holiday December as Congress pushes to pass its top priorities. The current schedule calls for lawmakers to depart on Dec. 13 for Christmas break.

Also this week, Yellen and newly reappointed Fed Chair Jerome Powell will testify at a pair of hearings on coronavirus funding. Tuesday, the Senate Banking Committee will hold a hearing titled “CARES Act Oversight of Treasury and the Federal Reserve: Building a Resilient Economy,” and Wednesday the House Financial Services Committee will hear from the pair on the same topic.

The House’s stopgap funding measure reportedly would fund the government into January, February or March of 2022. The current funding measure expires after Friday. The House could vote on a new resolution as soon as Wednesday.

Some Democrats, including House Appropriations Committee Chair Rosa DeLauro of Connecticut, are pushing for a short-term measure that would fund the government until roughly Dec. 17 in the hopes that would force Congress to pass a full FY22 appropriations bill.

Congress on Sept. 30 passed the current stopgap funding measure that funds the government from the fiscal year start of Oct. 1 through Dec. 3.

On the debt ceiling front, Yellen on Nov. 16 sent a letter to Congressional leaders warning that the U.S. could face default as soon as Dec. 15.

Congress in October passed a measure that boosted the debt ceiling by $480 billion.

Yellen noted that the new Infrastructure Investment and Jobs Act requires that $118 billion be transferred into the Highway Trust Fund, a move that’s expected to be completed by Dec. 15.

“Promptly thereafter, the funds will be invested in nonmarketable Treasury securities subject to the debt limit. While I have a high degree of confidence that Treasury will be able to finance the U.S. government through Dec. 15 and complete the Highway Trust Fund investment, there are scenarios in which Treasury would be left with insufficient remaining resources to continue to finance the operations of the U.S. government beyond this date,” Yellen said.

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