Friday, June 2, 2023

They demand from the US Congress a deal on the debt to avoid a “catastrophe”

The United States Secretary of the Treasury, Janet Yellen, demanded this Tuesday that Congress agree to reach an agreement with the Joe Biden-led government on the debt ceiling to avoid a “catastrophe” for the world’s largest economy. Is.

In a speech at a meeting of the Independent Bankers Community of America (ICBA) this morning, Yellen said, “If Congress doesn’t address the debt ceiling, there is no good alternative that the Treasury or the government can use to save us from disaster.” Is.” , ,

And it would be, he said, an “economic and financial” catastrophe that would “reverse” the economic recovery achieved in recent years and even cause the United States to go “further backward”.

Biden plans to try to reach an agreement on the debt limit with congressional leaders before leaving for Japan to attend the G7 summit, although the situation with Republicans is very different and it seems unlikely that this will happen. There should be some kind of agreement. can be achieved.

In her speech this morning, Yellen said the crisis was “entirely avoidable” and recalled that since 1960 Congress has raised or suspended the debt ceiling eighty times under both Democratic and Republican administrations.

“Congress should do it again. Raising or suspending the debt limit does not authorize the federal government to increase spending. It allows you to meet existing (spending) commitments,” Yellen insisted.

The current debt limit of $31.4 trillion was already reached on 19 January. So, at present, the government is drawing money from its reserves to pay off the debts it has contracted.

The Treasury Department estimates that these reserves will be depleted by June 1, although Yellen acknowledged this morning that it is “impossible to predict” the exact moment when it will be impossible for the government to continue making payments.

In any case, as soon as this happens, the US will automatically suspend payments, a first in its history.

From time to time, the United States faces default on the national debt because, unlike other countries, its executive can only issue debt up to limits established by Congress, which has the power to suspend that limit. as he sees fit.

Currently, Republicans control the US House of Representatives and are trying to force Biden to negotiate cuts to social programs in exchange for suspending the debt ceiling.

Nation World News Desk
Nation World News Desk
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