U.S. government will hit debt ceiling next week, Treasury Secretary says | 24CA News
Treasury Secretary Janet Yellen notified Congress on Friday that the U.S. is projected to achieve its debt restrict on Thursday and can then resort to “extraordinary measures” to keep away from default.
In a letter to House and Senate leaders, Yellen stated her actions will purchase time till Congress can go laws that can both increase the debt restrict from its present stage of simply over $31 trillion US — or droop it once more for a time period.
“I am writing to inform you that beginning on Thursday, January 19, 2023, the outstanding debt of the United States is projected to reach the statutory limit,” Yellen stated. “Once the limit is reached, Treasury will need to start taking certain extraordinary measures to prevent the United States from defaulting on its obligations.”
Those measures embrace delaying some funds, akin to contributions to federal workers’ retirement plans, so as to present some headroom to make different funds which are deemed important, together with these for Social Security and debt devices.
“Failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans and global financial stability,” she stated. “Indeed, in the past, even threats that the U.S. government might fail to meet its obligations have caused real harms, including the only credit rating downgrade in the history of our nation in 2011.”
Yellen stated that whereas Treasury cannot estimate how lengthy the extraordinary measures will enable the U.S. to proceed to pay the federal government’s obligations, “it is unlikely that cash and extraordinary measures will be exhausted before early June.”
The debate over elevating the debt ceiling will nearly actually lead to a political showdown between newly empowered GOP lawmakers who now management the House, and President Joe Biden and Democrats, who had loved one-party management of Washington for the previous two years.
Past forecasts recommend a default may immediately bury the nation in a deep recession, proper at a second of slowing international progress because the U.S. and far of the world face excessive inflation due to the pandemic and Russia’s invasion of Ukraine.
