June 21, 2024

The United States could be threatened with default as early as June 1st

The Finance Minister is sounding the alarm

The United States could be threatened with default as early as June 1st

Monday, May 1, 2023 | 23:02

However, the reserves can also only be used after a few weeks, and it is impossible to say the exact date with certainty, Yellen wrote in a letter to the Speaker of the US House of Representatives, Kevin McCarthy, on Monday. Estimate is based on currently available data. The minister warned that waiting until the last minute to suspend or raise the debt ceiling would damage people’s confidence in the US economy.

In the United States, Congress sets a debt ceiling at irregular intervals and limits the amount of money the country can borrow. The debt limit to date is around 31.4 trillion US dollars (about 29 trillion euros).

If the debt ceiling is not raised soon, there could be unprecedented defaults

Meanwhile, the debt ceiling of the USA has been reached and the US Treasury has to draw on the reserves – because now the US is no longer allowed to take on any new debt to pay its bills. If the debt ceiling is not raised soon, an unprecedented default from the US government could occur. The global economy could plunge into crisis.

In January, Yellen warned against a default in early June. The independent US Congressional Budget Office recently estimated a default between July and September without raising the debt ceiling.

Republicans oppose an increase without significant savings. McCarthy wants to persuade Democratic US President Joe Biden to agree to cuts in some government spending, such as investments in climate protection. Biden has made it clear that he will not be “blackmailed.”

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