Debt ceiling to fall: US Treasury Secretary Yellen warns of insolvency

Debt limit to fall
US Treasury Secretary Yellen warns of insolvency

And annually “greets” the insolvency. Treasury Secretary Yellen warns that US debt ceiling is approaching and should be raised or scrapped. Otherwise, the government is threatened with default again from the summer. The consequences would be significant.

US Treasury Secretary Janet Yellen has warned of an impending US government default. In a letter to the US Congress, she called on MPs to raise the debt limit or to suspend it altogether. Otherwise, the applicable debt ceiling will already be reached on January 19, wrote Yellen. After that, the Ministry of Finance would have to take “extraordinary measures” in order to be able to continue to guarantee the government’s solvency, it said.

Specifically, investments in certain public pension funds are affected. As a result, a payment default can be delayed until the beginning of June, the letter said. The debt limit so far is around 31.4 trillion US dollars (around 29 trillion euros). Yellen warned that a default would irreparably damage the US economy, the livelihoods of US citizens and the stability of the global financial system.

White House spokeswoman Karine Jean-Pierre warned Congress that raising the debt ceiling was non-negotiable. She stressed that the White House “will not conduct any negotiations” on the issue. There has always been bipartisan cooperation on raising the debt ceiling “and that’s the way it should be,” she said. “It shouldn’t be a political pawn.”

Republicans want something in return

In the past, the prospect of an impending payment default had had real consequences. In 2011, a newly elected Republican majority in Congress delayed raising the debt ceiling. As a result, the US credit rating was downgraded for the only time in history.

Statements by leading Republicans in the US House of Representatives had fueled concern that such a showdown could happen again. “We need to change the wasteful way money is spent in this country and we will make sure that happens,” newly elected Speaker of the House of Commons Kevin McCarthy said on Thursday. Since the beginning of January, the Republicans have had a razor-thin majority in the House of Representatives, with which they could prevent the debt limit from being raised.

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