The Treasury Department is now warning the U.S. could hit the debt limit as soon as October. CNBC's Ylan Mui reports on Treasury Secretary Janet Yellen's letter to Congress. For access to live and exclusive video from CNBC subscribe to CNBC PRO: [ Ссылка ]

Treasury Secretary Janet Yellen on Wednesday warned House Speaker Nancy Pelosi that the mere specter of a U.S. default can have drastic consequences for U.S. financial markets and urged Democratic leadership to raise or suspend the debt ceiling as soon as possible.

Yellen reiterated that lawmakers have until some point in October before the department exhausts its extended efforts to prevent what would be a historic default.

“A delay that calls into question the federal government’s ability to meet all its obligations would likely cause irreparable damage to the U.S. economy and global financial markets,” Yellen told Pelosi, D-Calif., in a letter dated Wednesday.

“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” she added.

Most economists say that a U.S. default could spark a severe economic downturn and send borrowing costs soaring across the American economy. Despite the dire consequences, lawmakers have made little progress.

The ceiling prevents the Treasury from issuing new bonds to fund government activities once a certain debt level, or date, is reached. That level reached $22 trillion in August 2019 and was suspended until the end of July 2021.

The new debt limit includes Washington’s additional borrowing since summer 2019. The Congressional Budget Office estimated in July that the new cap will likely come in just north of $28.5 trillion.

Asked about Yellen’s letter during her weekly press conference, Pelosi said Wednesday that Democrats won’t risk “the full faith and credit” of the U.S. government.

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