“Although I have a high degree of confidence that the Treasury can continue financing the United States Government after December 15, there are scenarios where it would not have enough resources to continue financing the Government’s operations after that date,” he said. Yellen in a letter sent to the Speaker of the House of Representatives, Democrat Nancy Pelosi.
“To ensure the complete good faith and credit of the United States, it is critical that Congress raise or suspend the debt limit as soon as possible,” Yellen added.
To fall into default In its financial obligations, Yellen warned that the US government will not be able to pay federal employees and contractors, nor will it pay social security checks; and, likewise, the holders of Treasury bonds will not receive the interest payments.
Yellen, the president of the Federal Reserve (Fed), Jerome Powell and various economists, warned that a default, even temporary, It could lead the United States into a recession and a rise in credit for a long time; in addition to affecting the credibility of the country, as reported by the agencies Bloomberg and AFP.
As Yellen noted in the letter, the deadline is tied to the new $ 550 billion infrastructure plan ratified by President Joe Biden last Monday.
Said package of measures will require a transfer from the Treasury of US $ 118,000 million to the Highway Trust Fund (to finance transportation infrastructure projects) within a month of the enactment of the law, that is, on December 15.
Last October, after an agreement in the Senate, the debt limit was extended by US $ 480,000 million (from US $ 28,400 million to US $ 28,900 million), which allowed the country to temporarily escape from default.
At the time, Yellen initially estimated that the agreement will allow the White House be financed until December 3, although that date was subject to change depending on the flow of expenses and income from the Treasury.
The Treasury is currently only US $ 25 million from the debt limit of US $ 28.9 billion and, so far, there has been no progress in Congress to suspend or increase the debt limit after the estimated date of December.
The Republican Party He has already anticipated that he will not support a new increase in the debt ceiling, and urged the Democrats to approve it on their own, using the so-called “conciliation process”:
Said mechanism, introduced in 1974, allows laws that affect federal income or expenditures to be passed with a majority without the necessary threshold of 60 votes in the Senate.
Democrats currently hold 50 of the 100 seats in the Senate, with the vice president’s tiebreaker vote. Kamala Harris in his capacity as president of the upper house; so they could use the shortcut.
However, the leader of the Democratic caucus in the Senate, Chuck Schumer, indicated yesterday that the debt issue requires bipartisan approval, as it was during the administration of the former president Donald Trump.
While Yellen promoted a bipartisan agreement, in recent weeks he suggested that Democrats consider increasing the debt ceiling on their own.
The Democratic Senator Bernie Sanders, a senior member of the Senate Budget Committee, considered it “irresponsible” for Republicans to “throw the world economy into chaos for not paying the debts incurred during the Trump administration.”
Source From: Ambito
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