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US Treasury Secretary Janet Yellen calls for bipartisan cooperation
Photo: SAUL LOEB / AFP
US Treasury Secretary Janet Yellen warns that the United States will face a default in October if the debt ceiling is not raised.
"During the month of October," the government will run out of money, Yellen said in a letter to the chairwoman of the House of Representatives, Nancy Pelosi.
One could not name an exact day for the impending payment default.
If the United States actually becomes insolvent, the US economy and the financial markets are threatened with "irreparable damage," continued Yellen.
Especially in view of the corona pandemic, from the consequences of which the economy and the labor market are still recovering, it is "irresponsible" to put the creditworthiness of the USA at risk.
Yellen's warning comes ten years after the rating agency S&P first downgraded the US's creditworthiness because of an impending default.
At that time, the US administration under Barack Obama could not agree with the Republicans on an increase in the debt limit.
Since August 2011, S&P has been rating the creditworthiness with AA + instead of AAA as before.
According to Yellen, we know from the past what damage it could do to wait to raise the debt ceiling.
The independent budget office had already warned of the impending payment default in July.
At the end of July, the then debt limit expired.
In order to prevent the payment default, the Ministry of Finance took "extraordinary measures" on August 1st and suspended various investments.
The current debt limit is around $ 28.5 trillion.
Democratic politicians have been pleading for an increase in the debt ceiling for several months - they hold the majority in the House of Representatives.
In the Senate, however, they rely on the support of Republicans led by Senator Mitch McConnell.
They refuse to support such applications.
jlk / dpa
