2023-05-01 21:00:37
The United States might find itself in default on its public debt in early June if no agreement is reached between Republicans and Democrats to raise the ceiling on its debt, currently set at 31,000 billion dollars, warned Monday the secretary at the Treasure Janet Yellen.
In mail Addressed to Republican House Leader Kevin McCarthty, Janet Yellen said “our best estimate is that we will no longer be able to meet all of the government’s obligations in early June, and potentially as soon as June 1.” .
Concretely, this does not mean that the United States will have to default on their next bond maturities following June 1st but that, in order to be able to continue to face these constrained expenses, the federal government will have to strongly limit others, which might in particular concerning health or retirement benefits.
In a statement, the Congressional Budget Office (CBO) confirmed the Treasury’s estimates, saying that “to the extent that the income reporting campaign has been weaker than initially anticipated, we now estimate that there is a significantly higher risk that the Treasury will no longer have the necessary funds from the beginning of June”.
Also read: Debt ceiling: the United States replays to scare itself
A political showdown
The United States has reached its debt ceiling, which must be regularly raised by a vote of Congress, from mid-January, to take a first series of measures allowing it to continue to ensure all government spending. Republicans, who have held a slim majority in the House of Representatives since early January, and Democrats have since entered a political tussle, with Republicans linking the debt ceiling increase to a cut in federal government spending. to validate an agreement.
Democratic President Joe Biden spoke with Kevin McCarthy on Monday and invited him to the White House on May 9, according to a statement from the US executive, with a close source saying the discussion was regarding the debt ceiling. Joe Biden has repeated several times that the raising of the ceiling must be carried out unconditionally, believing that the latter was the result of the policies carried out in the past by all the administrations, from both parties.
On Wednesday, the House of Representatives voted on a plan proposed by Kevin McCarthy providing for a $4.5 trillion cut in federal spending over the next ten years in exchange for a $1.5 trillion ceiling increase, or a March 31 review clause. 2024, which would therefore make debt one of the main themes of the presidential campaign for the November elections of the same year.
Read also: Republicans vote on text linking debt ceiling and budget cuts to put pressure on Joe Biden
The text is unlikely to be voted on by the Senate, controlled by the Democrats by a slight majority. The two parties must, however, reach an agreement quickly: the current parliamentary session provides for only 12 days of debate on Capitol Hill by June 1. A default “would cause an economic and financial catastrophe”, warned Janet Yellen on April 25.
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