The United States Secretary of the Treasury, Janet Yellenwarned that unless Congress acts soon to raise the country’s debt limit, “financial and economic chaos will ensue” with implications around the world.
The government of Democrat Joe Biden said that, if an agreement is not reached, the United States will not be able to meet its obligations as of June 1, which for the first time in history would put the country in a default situation.
“It is simply unacceptable for Congress to threaten economic calamity for American households and the global financial system as the cost of raising the debt ceiling“Yellen told ABC.
The US public debt ceiling can only be increased by passage of Congressional legislation signed by the President.
The Republican-led House of Representatives voted in late April to raise the debt limit, but only with drastic cuts to rein in what the Republican party sees as excessive spending. But the text has no chance of being adopted as it is in the Senate with a Democratic majority.
Biden has so far refused to negotiate any concessions under pressure to ward off the specter of a default, pointing out that the debt ceiling has been routinely raised dozens of times, even under former Republican President Donald Trump.
However, he invited the four leaders of the two main parties in Congress to the White House on Tuesday to discuss the matter.
“I know he wants to set up a process where priorities and spending levels are discussed,” Yellen said, “but These negotiations should not be conducted with a gun pointed at the head of the American people.”
Yellen dodged questions about the possibility of Biden unilaterally authorizing more loans by invoking the 14th Amendment to the Constitution, which states that “the validity of the public debt of the United States … must not be questioned.”
“We should not get to the point of questioning whether or not the president can issue debt”, said. “It would be a constitutional crisis.”
The head of state’s economic advisers believe that if the world’s leading power were to fail to meet its long-term financial deadlines, it could lose more than eight million jobs this summer and see its GDP plummet by 6%.
Since the United States hit its $31.4 trillion borrowing limit in January, the Treasury has taken extraordinary steps to continue funding the federal government. But as Yellen warned last Monday, those measures will soon run out.
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