23-5-2023 (WASHINGTON) US Treasury Secretary Janet Yellen has issued a warning that the United States faces the risk of defaulting on its federal debt if the White House and Congress do not reach an agreement to raise the national debt ceiling. In a letter addressed to congressional leaders, Yellen stated that the country could reach a point of being unable to meet its financial obligations as early as June 1.
Yellen emphasized the urgency of the situation, citing the dire consequences that a failure to raise the federal borrowing limit would have on the US and global economies, both of which heavily rely on the stability of the US dollar. She expressed concerns over the potential for an “economic and financial catastrophe” should Congress fail to act promptly.
Highlighting the lessons learned from previous impasses over the debt limit, Yellen stressed the damaging effects of waiting until the last minute to suspend or increase the debt ceiling. Such delays can harm business and consumer confidence, increase borrowing costs for taxpayers, and have a detrimental impact on the credit rating of the United States, warned the Treasury Secretary.
Recent appeals from the US administration have called on Congress to raise the national debt ceiling, currently set at $31.4 trillion. However, given that Republicans hold the majority in the House of Representatives, they have traditionally been skeptical about allowing further debt and have advocated for reducing government spending instead.
