The US Treasury Secretary is skeptical about the country’s future. Janet Yellen, 75, is appealing to Congress to make a decision to raise the debt limit as soon as possible. Government spending is coordinated with the upper limit.
In an opinion piece in the Wall Street Journal, Yellen wrote that if the United States could not meet its obligations, it would trigger a historic financial crisis.
“We will emerge from this crisis as a permanently weak country,” Yellen wrote. US creditworthiness has so far been a strategic advantage.
She said that “sometime in October” the US government would not be able to meet its payment obligations, if no decisions were made by then.
The conflict between Democrats and Republicans
But neither Democrats nor Republicans seem to want to be solely responsible for raising their legal debt limit again, Spiegel writes.
While Democrats are firing on Donald Trump (75) for amassing an additional $8 trillion in debt during his tenure, Republicans are firing at Joe Biden (78) as an unhealthy spendthrift.
Now consideration is in the room to tie debts to hurricane victim assistance funds and budget law. If this proposal is rejected by the Republicans, there will be a shutdown.
‘Don’t allow spending policy’
Democrats could have solved the problem on their own by increasing their spending bill. This does not require Republican approval. But they also want to bind the opposing party — just as they have done under Trump.
Republicans, on the other hand, don’t want to get into that. With a Democratic president, a Democratic House, and a Democratic Senate, Democrats have all the tools they need to raise the debt ceiling. “Republicans will not allow any harsher, partisan tax and spending policies,” said Republican Senator Mitch McConnell.
Meanwhile, the mood on Wall Street is tense. “Political machinations threaten to undermine the confidence of financial markets,” said investment expert Solita Marcelli of UBS Global Wealth Management.
The crisis caused by a US government default will exacerbate the economic damage caused by the ongoing coronavirus pandemic, moving markets and plunging the US economy into recession. Yellen believes that millions of jobs will be lost and that interest rates will rise permanently. (MAN/SDA)
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