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Financial Markets Are Nervous The Government Could Default On Its Debts

A MARTINEZ, HOST:

The federal government has tens of billions of dollars in payments coming due this Friday. The government has enough cash to pay those bills for now. That may not be true in just a few weeks, unless Congress approves additional borrowing. Senate Republicans have been blocking that, raising the risk that the government could default on its debts for the first time ever.

NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: Treasury Secretary Janet Yellen warns that unless the government's allowed to borrow more money, it could run short of cash to pay its bills in less than three weeks. Yellen told lawmakers that would be disastrous for the economy and for the families who are counting on those payments. She urged members of Congress not to wait until the last minute to act.

(SOUNDBITE OF ARCHIVED RECORDING)

JANET YELLEN: Even coming very close to the deadline without raising the debt ceiling can undermine the confidence of financial markets in the creditworthiness of the United States.

HORSLEY: That is the government's ability and willingness to pay what it owes. The stock market, which was already worried about high inflation, fell sharply on Tuesday, with the Dow tumbling nearly 570 points.

Senate Republicans, like John Kennedy of Louisiana, acknowledged the need for additional government borrowing, but insist that Democrats, who hold the majority in Congress, should approve it on their own.

(SOUNDBITE OF ARCHIVED RECORDING)

JOHN KENNEDY: Why don't you just do that? - problem solved - done - easy peasy - finished. Let's go have a cocktail.

HORSLEY: Never mind that Republican lawmakers are actively blocking an up or down vote.

Ohio Democrat Sherrod Brown accused the GOP of ignoring federal obligations, many of which were run up while Republicans were in power.

(SOUNDBITE OF ARCHIVED RECORDING)

SHERROD BROWN: I wonder if Secretary Yellen takes you up on that offer to go get a cocktail if you would pay or you'd skip out on paying the bill and expect Secretary Yellen to pay.

HORSLEY: Democrats could sidestep GOP opposition and raise the debt limit as part of a big spending package they also hope to pass on a party-line vote. That would require agreement, though, from all factions of the party, something that may not be possible in the next three weeks.

Scott Horsley, NPR News, Washington.

(SOUNDBITE OF BONOBO'S "KONG") Transcript provided by NPR, Copyright NPR.

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