However, the reserves also could not be used up until a few weeks later and it is impossible to state the exact date with certainty, Yellen wrote in a letter to US House Speaker Kevin McCarthy on Monday. The estimate is based on currently available data. The minister warned that it would damage people’s confidence in the US economy to wait until the last minute to suspend or raise the debt limit.
In the US, Congress sets a debt ceiling at irregular intervals and determines how much money the state can borrow. The debt limit so far is around USD 31.4 trillion (about EUR 29 trillion). The current debt ceiling has now been reached in the US and the US Treasury Department has to draw on the reserves – because the US is now no longer allowed to take on new debt to pay its bills.
If the debt ceiling is not raised soon, an unprecedented bankruptcy of the US government could ensue. That could plunge the global economy into a crisis.
In January, Yellen warned of bankruptcy in early June. The estimate of the Independent Budget Bureau of the US Congress most recently predicts a default between July and September with no increase in the debt ceiling.
Republicans oppose an increase without significant cuts. McCarthy wants Democratic US President Joe Biden to agree to cuts in certain government spending, such as investments in climate protection. Biden made it clear that he would not be “blackmailed”. (sda/dpa)
Soource :Watson
I am Amelia James, a passionate journalist with a deep-rooted interest in current affairs. I have more than five years of experience in the media industry, working both as an author and editor for 24 Instant News. My main focus lies in international news, particularly regional conflicts and political issues around the world.
