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Debt due from January 19: US Treasury Secretary warns of default

Status: 01/14/2023 3:47 pm

The US government could face bankruptcy early next week. Treasury Secretary Yellen has warned about this in a letter to Congress. He fears “irreparable damage” if Parliament does not act immediately.

US Treasury Secretary Janet Yellen has warned of an impending US government default. “It is critical that Congress act in good time to raise or suspend the debt ceiling,” Yellen wrote in a letter to the leaders of both houses of Congress.

Otherwise, the applicable debt ceiling would already be reached on January 19, Yellen wrote. It then said the finance ministry would have to take “extraordinary measures” to continue guaranteeing the government’s debt.

The debt ceiling is $31.4 trillion

In particular, investments in certain public pension funds are affected. As a result, the payment may be delayed in early June, the letter said. So far the credit limit has been 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 US citizens and the stability of the global financial system. In the past, defaults on upcoming payments have had real consequences.

Republicans’ threats are in the chamber

In 2011, a newly elected Republican majority in Congress delayed raising the debt ceiling. As a result, the US credit rating was downgraded for the first time in history. Statements by leading Republicans in the US House of Representatives fueled concern that such a conflict could recur.

“We need to change the wasteful way money is spent in this country and we will make sure that happens,” Kevin McCarthy, the newly elected Speaker of the House of Commons, said on Thursday. Since early January, Republicans have held a slim majority in the House of Representatives, enough to block a debt ceiling hike.

The government is showing seriousness to raise the upper limit

White House spokeswoman Karine Jean-Pierre warned Congress that raising the debt ceiling is non-negotiable. He insisted that the White House would not negotiate on the issue. Bipartisan cooperation on raising the debt ceiling has always been “as it should be,” he said. “It should not be a political pawn.”