Treasury Secretary Janet Yellen has warned of a potential financial crisis and recession if the US government fails to service its debt for the first time. She said millions of jobs would then be at risk. According to your department, the money may run out in the US by October 18th. A default would damage confidence in the creditworthiness of the world’s largest economy, potentially leading to economic disruption. Regarding a potential default, US President Joe Biden said, “It’s a meteor that’s heading to hit our economy.”
The two parties in Congress blame each other for the row over the roof. Biden Democrats initially want the limit to be raised by December 16, 2022. In order to get this bill to a vote in the Senate in the normal way, they also need votes from Republicans. The leader of their parliamentary group, McConnell, refused to agree. He also repeatedly indicated that Democrats could challenge the entire process with a simple majority in the Senate through a special procedure for budget issues. The Democrats oppose this.
The last debt limit in effect in July has expired. Since then, the Ministry of Finance has taken “extraordinary measures” to prevent defaults. So far, Republicans and Democrats have still agreed to raise the cap — albeit often after a shudder and several rounds of negotiations. If Democrats now accept McConnell’s proposal, many fear that the current stalemate between Democrats and Republicans will only turn into December.
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