2023-05-07 19:52:07
US Treasury Secretary Janet Yellen warned Sunday that unless Congress acts soon to raise the country’s debt limit, “financial and economic chaos will ensue” with implications around the world.
(What can happen if the United States goes into financial default).
The government of Democrat Joe Biden has said that, if an agreement is not reached, the United States will not be able to meet its obligations as of June 1, which for the first time in history would put the country in a situation of default.
“It is simply unacceptable for Congress to threaten economic calamity for American households and the global financial system as the cost of raising the debt ceiling,” Yellen told ABC.
The public debt ceiling of USA it can only be increased by the passage of legislation of Congress signed into law by the president.
The Republican-led House of Representatives voted in late April to raise the debt limit, but only with drastic cuts to rein in what the Republican party sees as excessive spending.
(Follow the banking crisis in the US.)
But the text has no chance of being adopted as it is in the Senate with a Democratic majority. Until now, Biden, has refused to negotiate possible concessions under pressure to remove the specter of a defaultnoting that the debt ceiling has been routinely raised dozens of times, even under former Republican President Donald Trump.
However, he invited the four leaders of the two main parties in Congress to the White House on Tuesday to discuss the matter.
“I know he wants to establish a process where priorities and spending levels are discussed”Yellen said, “but these negotiations should not be conducted with a gun pointed at the head of the American people.”
Yellen dodged questions about the possibility of Biden unilaterally authorizing more loans by invoking the 14th Amendment to the Constitution, which states that “the validity of the public debt of the United States (…) must not be questioned”.
(Despite inflation subsiding, the Fed raised its rate again.)
“We shouldn’t get to the point of questioning whether or not the president can issue debt,” said. “It would be a constitutional crisis.”
The head of state’s economic advisers believe that if the world’s leading power were to fail to meet its long-term financial deadlines, it could lose more than eight million jobs this summer and see its GDP plummet by 6%.
Since the United States hit its $31.4 trillion debt limit in January, Treasury has taken extraordinary measures to continue funding the federal government. But as Yellen warned last Monday, those measures will soon run out.
AFP
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