Monday, June 5, 2023

Yellen calls for agreement on US debt ceiling to avoid “catastrophe”

The United States Secretary of the Treasury, Janet Yellen, called on Congress to 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.

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

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.

Janet Yellen said in her speech that the crisis was “entirely avoidable”. He reminded that since 1960, Congress has raised or suspended the debt ceiling eighty-fold with both Democratic and Republican administrations.

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 exhausted by June 1. Although Yellen acknowledged this morning that it was “impossible to predict” the exact moment at which it would be impossible for the government to continue making the payments.

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

World Nation News Desk
World Nation News Desk
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