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Debt cover from January 19th: US Treasury Secretary warns of default

Status: 01/14/2023 02:02 AM

The US government may face bankruptcy as early as next week. Treasury Secretary Yellen warns of this in a letter to Congress. She fears “irreparable damage” if Parliament does not act immediately.

US Treasury Secretary Janet Yellen has warned of an imminent failure of the US government. “It is critical that Congress act in a timely manner to raise or suspend the debt ceiling,” Yellen wrote in a letter to leaders of both houses of Parliament.

Otherwise, the debt ceiling already in place will be reached on Jan. 19, Yellen wrote. After that, she added, the Ministry of Finance will have to take “extraordinary measures” so that it can continue to guarantee the government’s solvency.

The debt ceiling is $31.4 trillion

Specifically, investments in certain public pension funds are affected. As a result, the default could be delayed until the beginning of June, the letter said. The debt limit to date is around 31.4 trillion US dollars (about 29 trillion euros).

Yellen warned that a default would cause “irreparable damage” to the US economy, the livelihoods of American citizens and the stability of the global financial system. In the past, the prospect of imminent default had real consequences.

Republican threats in the hall

In 2011, the newly elected Republican majority in Congress delayed raising the debt limit. As a result, the credit rating of the United States was downgraded for the only time in history. The statements of senior Republicans in the US House of Representatives raised fears that such a confrontation could happen again.

Newly elected House of Commons Speaker Kevin McCarthy said Thursday: “We need to change the wasteful way money is spent in this country and we’re going to make sure that happens.” Since the beginning of January, Republicans have had a very slim majority in the House of Representatives, with which they can prevent an increase in the debt limit.

The government is pushing to raise the cap

White House spokeswoman Karen Jean-Pierre warned Congress that raising the debt ceiling is not negotiable. And she stressed that the White House “will not conduct any negotiations” on this issue. There has always been bipartisanship on raising the debt ceiling, she said, “and that’s just the way it should be.” “He should not be a political pawn.”