The US Congress must raise the debt ceiling in June. It is even possible to take action before then. According to the finance ministry, after June 1, 2023, there is a risk of running out of money. US Treasury Secretary Janet Yellen wrote this in a letter to House Speaker Kevin McCarthy on Monday.
The US Congress sets the debt ceiling at irregular intervals and determines how much money the government can borrow. That debt ceiling has so far stood at $31.4 trillion (about 29 trillion euros). However, that limit was already reached in January. If the debt ceiling is not raised, the U.S. government may not be able to meet all of its fiscal obligations within weeks.
The Treasury Department has taken “exceptional measures” to keep spending under the cap. Secretary Yellen indicated that when the Treasury Department began using these accounting tools, it was highly uncertain how long they would last. On Monday, he said there would be no money before June 1. Economists previously thought the U.S. could hold the bill until August.
So Yellen called on Congress on Monday to “act as soon as possible.” If the debt ceiling is not raised, government employees cannot be paid, benefits cannot be given. America’s creditworthiness will also be at risk. Economists fear this could shake financial markets.
So US President Joe Biden agreed next week with Republican Speaker of the US House of Representatives Kevin McCarthy and other congressional leaders. The May 9 meeting is the “first sign of progress” in debt ceiling negotiations, according to Bloomberg News.
The US media reports that the debt ceiling has been raised, extended or revised no fewer than 78 times since 1960. Biden insisted on Monday that the United States could no longer meet its financial obligations over the country’s more than 200-year history.
Republicans voted last week to raise the debt ceiling, but McCarthy opposed government spending cuts. Biden refused to agree because the cuts would make his policy plans impossible.
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