Treasury Secretary
Janet Yellen
(Joe Biden's finance minister) made it clear to Congress on Monday that the United States could default on its debt as of June 1, and default,
if
lawmakers don't raise or they remove the nation's debt ceiling before then and avert what
could become a global financial crisis.
The fight for the debt ceiling has ideological biases when the president has just announced that he is running for re-election.
Republicans put conditions on Biden to raise the debt ceiling, notably
drastic spending cuts
and the reversal of some aspects of the president's agenda: student loan forgiveness and green energy tax credits;
two issues at the antipodes of the opposition agenda.
Lawmakers speak to the media about the debt ceiling debate.
Photo: : Kevin Dietsch / Getty Images via AFP
In a letter to House and Senate leaders, Yellen urged congressional leaders to "protect the full faith and credit of the United States by acting as soon as possible" to address the $31.4 trillion cap
on
her statutory borrowing authority.
He added that it is impossible to predict with certainty the exact date that the United States will run out of cash.
The United States could default on its debt in early June, Treasury Secretary Janet Yellen warned on Monday, as
politicians tussle
over raising the government's borrowing limit.
Last week, Republicans voted to raise the national debt limit but with their demands on the table.
They consider the president's spending "excessive."
Republicans were determined to push the Limit, Save and Grow Act through the lower house of Congress to bolster their position in negotiations with Biden, who has
refused to accept spending cuts.
But that law has no chance of becoming law as Democrats, who control the Senate and the White House, oppose it.
Although the United States
reached its debt limit
of $31.4 trillion in January, the Treasury took extraordinary measures that
allow it to continue financing
government activities.
If the debt ceiling is not raised or removed by Congress before the current one runs out, the government risks defaulting on its payment obligations, with profound
implications for the domestic and global economy.
"Our best estimate is that
we will be unable to continue to meet
all government obligations in early June, and potentially as soon as June 1, if Congress does not raise or suspend the debt limit before then," he said. Yellen in a letter to House Speaker Kevin McCarthy.
"Given current prospects, it is imperative that Congress act as soon as possible to raise or suspend the debt limit to provide longer-term certainty that the government will continue to meet its payments," Yellen said.
Yellen: "It is imperative that Congress act as soon as possible to raise or suspend the debt limit."
Photo: Stefani Reynolds/AFP
According to The New York Times, economists have warned that if the debt ceiling, which limits the total amount of money the United States can borrow, is not raised, it threatens to rock financial markets and send the world economy into
crisis
. financial.
Because the United States
runs a budget deficit
, which means it
spends more money than it takes in
, it must borrow large sums of money to pay its bills.
In addition to paying Social Security benefits, along with the salaries of military and government workers, the United States
must also pay interest and other payments to the bondholders
who own its debt.
Despite being the only country that issues dollars, the United States finances itself through borrowing and not through issuance.
The plan is to borrow
$726 billion during the quarter
.
That's $449 billion more than projected in January, due to a lower cash balance at the start of the quarter and lower-than-expected income tax revenue projections and higher expenses.
While Russia's invasion of Ukraine remains a drag on US economic growth, Treasury officials say
the debt ceiling debate
poses the biggest risk to America's financial position.
The negotiations
Biden called McCarthy on Monday to invite him to
a May 9 meeting
with the other top Republican and Democratic leaders in Congress.
The media question lawmakers on Capitol Hill about a possible default.
Photo: Kevin Dietsch/Getty Images via AFP
A source familiar with the negotiations said Biden spoke with McCarthy on Monday about expanding the national debt and avoiding a default.
As head of the narrow Republican majority in the House of Representatives, McCarthy has primary control over America's budget issues.
In a statement released Monday,
McCarthy accused Biden
of "threatening to push our nation into its first default."
He called on the president and the Senate "to get to work, and soon" to
accept spending cuts and avert crisis.
"House Republicans are running out of time to avert an economic catastrophe of their own making," said Brendan Boyle, top Democrat on the House Budget Committee.
"Today's update from the Treasury Department has to be a wake-up call for Chairman McCarthy," he added, saying the president has "wasted enough House time" appeasing his extremist allies.
But House Republicans, in a tweet after the Treasury announcement, reaffirmed the need to "limit Washington spending."
As the fight continues,
time is ticking.
The timetable for negotiations is compressed, leaving little time for Biden and congressional leaders to come to an agreement on the cap increase.
McCarthy is traveling to the Middle East this week.
Later this month, Biden is scheduled to attend the Group of 7 nations leaders' summit in Japan and then travel to Australia for a summit with the leaders of Japan, India and Australia.
Source: Associated Press, AFP, BBC News and The New York Times
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