US Treasury Secretary Janet Yellen He appealed to Congress to quickly set a new debt ceiling in order to avoid a potentially catastrophic default.
If the US government can no longer service its debt, the economy and Americans’ livelihoods threaten “irreparable damage,” Yellen warned Friday in Washington. This is why it never happened regardless of the ruling party.
The current debt ceiling expires at the end of July, which means the US government can no longer take on any new debt to pay for its expenses. Yellen warned that from August onwards, the Treasury would have to take “extraordinary measures” to prevent defaults.
Because of the economic consequences of the pandemic, it is uncertain to what extent the government can fund itself. On October 1 alone, there will be statutory payments worth 150 billion US dollars (127.5 billion euros).
The United States threatens to run out of money
The independent Congressional Budget Office (CBO) estimates that without a new debt ceiling, the government will “likely” run out of money in October or November. Without an agreement, the cap would drop to its 2019 level in August, $22 trillion, plus debts accrued since then, about $6.5 trillion. Thus, the new upper limit will be around $28.5 trillion (€24.2 trillion), the CBO explains.
So far, Republicans and Democrats have still agreed to raise the cap — albeit often after a shudder and several rounds of negotiations. Democrats led by President Joe Biden control the House, but in the Senate they rely on Republican support. The economic consequences could be without agreement on United States of AmericaThe global economy and the stability of the financial system would be formidable.
