US Treasury Secretary Janet Yellen has warned that the United States could reach its debt ceiling as early as June 1. Speaking during a Senate Appropriations subcommittee hearing, Yellen stated that the government would be unable to pay its bills and could default on its debt if Congress does not act to raise or suspend the debt limit.
The debt ceiling is a legal limit on the amount of debt the US government can issue to fund its operations. The limit is currently set at $28.4 trillion and was reinstated on August 1, 2021, after being suspended for two years. Yellen has urged lawmakers to address the issue, stating that failing to do so could have serious consequences for the US economy.
Yellen further explained that the Treasury Department has already taken extraordinary measures to conserve cash in order to avoid reaching the debt ceiling. However, those measures will only last until the end of July. After that, if the debt limit has not been raised or suspended, the US could face a default on its debt, which would have severe repercussions for the global financial system.
The issue of the debt ceiling has been a contentious one in US politics for several years. While raising the limit has traditionally been a routine matter, it has become increasingly politicized in recent years, with lawmakers using the issue to push their own agendas. In 2011, a standoff over the debt ceiling resulted in the US credit rating being downgraded for the first time in history.
Yellen has urged lawmakers to raise or suspend the debt limit as soon as possible to avoid a repeat of past incidents. She emphasized that defaulting on US debt would be “catastrophic,” causing interest rates to rise, reducing the value of the dollar, and potentially triggering a recession.
In conclusion, the warning from the US Treasury Secretary regarding the debt ceiling highlights the importance of addressing the issue. The United States could face severe consequences for the global economy if the debt limit is not raised or suspended soon. Yellen’s warning is a call to action for lawmakers to act quickly and responsibly in order to avoid a potentially catastrophic situation.
