Treasury Secretary Yellen has warned that the US could face insolvency at the beginning of June if the debt dispute is not settled quickly. President Biden has invited Republican Majority Leader McCarthy to a meeting.
According to Treasury Secretary Janet Yellen, the United States is threatened with insolvency as early as the beginning of June.
If Congress doesn’t raise or suspend the debt ceiling in the coming weeks, the administration will be unable to meet all of its commitments “by early June, possibly as early as June 1,” Yellen wrote to House Majority Leader Kevin McCarthy, and other senior politicians. Congress must therefore act as soon as possible.
debt ceiling already achieved
Republicans and Democrats have been at odds over government spending and the country’s debt burden for months. The United States had already officially reached the debt ceiling of $31.38 trillion (around €28.6 trillion) in mid-January.
The government has since been able to avert the insolvency through a series of “extraordinary measures”. A default would have potentially devastating consequences for the US and the international financial system.
Republicans insist spending cuts
The US debt limit has been suspended or raised dozens of times by presidents of both parties over the past few decades – and with bipartisan majorities.
The Republicans now want to use their agreement to raise the upper limit as a bargaining chip to push through spending cuts. US President Joe Biden, on the other hand, insists that the debt ceiling must be raised unconditionally, since previous governments are responsible for the debt.
Biden invites McCarthy over
The White House said in the evening that Biden called McCarthy to invite him to a May 9 meeting at which other key Democrats and Republicans will be represented in Congress.
A few days ago, the Republican-dominated House of Representatives passed a bill calling for massive spending cuts in exchange for raising the debt ceiling.
Among other things, subsidies and tax credits for renewable energy and a waiver of student debt promoted by President Joe Biden are to be eliminated. Passing by the Senate, in which the Democrats have a slight majority, is considered unlikely.