US Treasury Secretary Janet Yellen warned Monday that the country could default on its national debt on June 1 and urged Congress to approve a suspension of the debt ceiling as soon as possible.
In a letter to the Speaker of the House of Representatives, Republican Kevin McCarthy, the secretary estimated that the Executive will cease to be able to meet its government obligations “at the beginning of June, potentially June 1, if Congress does not raise or suspend the limit of debt before then”.
Yellen stressed that, given these forecasts, it is “imperative” that Congress act as soon as possible to guarantee in the long term the certainty that the Government will be able to continue counting on funds to face payments.
The Treasury representative sent an identical letter, among others, to the leader of the Democrats in the Lower House, Hakeem Jeffries; the leader of the Senate, Chuck Schumer, also a Democrat, and the conservative Mitch McConnell, the main figure of the Republican opposition in that chamber.
“We don’t have the luxury of waiting until June 1 to come together, pass a clean bill to prevent default and avoid catastrophic consequences for our economy and millions of American families,” Schumer and Jeffries said in a joint statement.
The time has come, they added, to “leave partisan interests behind and do what is right and necessary for the American people.”
The current debt ceiling is $31.4 trillion and was reached on January 19. That same day, the Treasury activated “extraordinary measures” to pay the bills, but already then it was stressed that the use of these special financial tools only extended until June 5.
The Republican-majority House of Representatives approved a bill on April 26 to raise the debt ceiling in exchange for deep cuts in public spending, but that initiative has little prospect of success because Democrats are in the majority in the Senate and the White House has warned that the president, Joe Biden, will veto it if he reaches his office.
“The Democrats have no more excuses to continue obstructing. (…) It is time to sit down and negotiate,” the Republican National Committee said in another statement.
Yellen warned that similar situations in the past have shown that “waiting until the last minute to suspend or increase the debt ceiling can cause serious damage to business and consumer confidence, increase short-term borrowing costs for taxpayers and adversely affect the credit rating of the United States”.
After his message, Biden summoned McCarthy to a meeting at the White House on May 9.
The United States has never had to declare default on its national debt, but from time to time it looks at that possibility because, unlike other countries, its government can only issue debt up to the limit established by Congress, which has the power to raise that roof as he sees fit.
According to the criteria of The Trust Project
