The US Treasury Secretary warns of a US default.
(Photo: Reuters)
Washington US Treasury Secretary Janet Yellen has warned of a possible default by the US government on December 15 – almost two weeks later than she previously feared. “There are scenarios in which the Treasury Department does not have sufficient funds to fund the operations of the US government beyond this point in time,” said Yellen in a letter published by the department on Tuesday (local time) to the Chairwoman of the House of Representatives, Nancy Pelosi. To ensure confidence in the US and the creditworthiness of the world’s largest economy, the US Congress must raise or suspend the debt ceiling as soon as possible.
Yellen said she was very confident that the Treasury Department would be able to fund government operations by December 15 and make the $ 118 billion transfer due that day to the Highway Trust Fund (HTF).
After December 15, however, there is a threat of a “shutdown”, since the funds of the Treasury are exhausted, since the upper limit for borrowing has been reached. Without an increase in the debt ceiling, there would be a partial government standstill, US government employees would be sent on compulsory leave, and authorities would have to close.
In October, the US Congress approved an increase in the debt ceiling by 480 billion US dollars (just under 424 billion euros) in order to give President Joe Biden’s administration financial leeway at least until the beginning of December. An impending payment default was only postponed. Yellen had previously warned urgently of a possible financial crisis and recession should the US government fail to service its debts for the first time. So far, Yellen had predicted that the United States was threatened with default on December 3rd. Before raising the debt ceiling, the minister named October 18 as a critical date.
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The interim solution agreed in October was preceded by a violent dispute between Biden’s Democrats and Republicans. The Democrats wanted to temporarily suspend the debt ceiling or raise it significantly. The Republicans opposed this, however.
More: The USA only manages its crises – no trace of foresight.