WASHINGTON – Treasury Secretary Janet Yellen on Tuesday called on Congress to reach an agreement with the Joe Biden-led administration on the debt ceiling to avoid a “catastrophe” for the world’s largest economy.
In a speech at a meeting of the Independent Banking Community of America (ICBA) on Tuesday, 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” disaster that would “reverse” the economic recovery achieved in recent years and even cause the United States to retreat “even more”.
Biden is scheduled to meet with congressional leaders this afternoon to try to reach an agreement on the debt ceiling before traveling to Japan tomorrow to attend the G7 summit, though the situation with Republicans is far from over and that looks unlikely. Is. , that such an agreement can be reached.
In her speech, 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 just allows it to meet existing (spending) commitments,” Yellen insisted.
The current debt limit of $31.4 trillion was already reached on 19 January. Therefore, the government is drawing money from its reserves to pay off the loans it has taken.
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 House and are trying to force Biden to negotiate cuts to social programs in exchange for raising the debt ceiling.