Bankruptcy of the United States if the debt ceiling is not raised

US Treasury Secretary Janet Yellen has urged Congress to raise the government’s debt ceiling to $31.4 trillion to avoid an “unprecedented default”. This, she said, would cause a global economic slowdown, undermining US economic leadership.

“Bankruptcy would threaten the progress we have made, for which we have worked so hard for the past few years during our recovery from the pandemic. And that would cause a global slowdown that would set us back a lot more,” Yellen said at a summit of the G7, a group of seven wealthy nations, in Japan. There is also the question of whether the United States is still capable of defending national security interests.

The debt ceiling is the maximum amount of debt the US government can assume under the law. President Joe Biden wants Republicans, the majority in the House of Representatives, to agree to raise the debt ceiling without additional conditions. Economists estimate that the Treasury will run out of cash within months if the ceiling is not raised.

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