US approaches debt ceiling, minister wants higher ceiling

The United States government has a legal limit on the amount of debt it can take on. The debt ceiling will be reached next Thursday, Treasury Secretary Janet Yellen warned in a letter to members of Congress. He called on political leaders to agree soon to increase the ceiling, though “extraordinary measures” could keep the money spent for a while longer.

For now, Republicans refuse to accept a higher debt ceiling. They are demanding that Democratic President Joe Biden’s administration cut government spending in exchange for such a commitment. After last fall’s midterm elections, Republicans control the House of Representatives and Democrats control the Senate.

Biden has accused Republicans of being “hostage hostages” and called for raising the debt ceiling without delay. Democrats point out that this happened many times under Biden’s predecessor, Republican Donald Trump.

Currently, the US Treasury is $31.4 trillion in debt. The government is currently about $78 billion away.

Economists expect the Treasury to run out of money if the ceiling is not raised in August. Analysts on Wall Street expect panic to emerge only in the second half of the year if the situation remains unchanged, as special accounting measures will provide relief for the time being.

In an earlier clash with Republicans over the debt ceiling, Yellen warned that the federal government’s employees and subcontractors could not be paid without a pay raise. The government can no longer offer concessions either. In addition, the US government may default on its obligations to bondholders.