Washington US Treasury Secretary Janet Yellen warned on June 1 that the government could default in the dispute over the debt ceiling. However, the reserves could also not be used up until a few weeks later, and it is impossible to name the exact date with certainty, Yellen wrote in a letter to the Speaker of the US House of Representatives, Kevin McCarthy, on Monday. The estimate is based on currently available data. The minister warned that it would damage people’s confidence in the US economy to wait until the last moment to suspend or raise the debt limit.
Now US President Joe Biden has called the leaders of Congress and invited them to a meeting at the White House to discuss the issue. The meeting is scheduled to take place on May 9th.
In the United States, Congress sets a debt ceiling at irregular intervals and determines how much money the state can borrow. The debt limit so far is around 31.4 trillion US dollars (around 29 trillion euros). In the meantime, the applicable debt ceiling has been reached in the USA and the US Treasury Department has to tap into the reserves – because the USA is now no longer allowed to take on any new debt in order to pay its bills. If the debt ceiling is not raised soon, an unprecedented US government default could occur. That could plunge the global economy into a crisis.
In January, Yellen warned of a default in early June. The estimate of the independent budget office of the US Congress most recently forecast a default between July and September without raising the debt ceiling.
Republicans are opposed to an increase without significant savings. McCarthy wants to get Democratic US President Joe Biden to agree to cuts in certain government spending, such as investments in climate protection. Biden made it clear that he would not be “blackmailed”.
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