Debt limit crisis in the USA – Breaking News

Yellen penned another letter to send to US House of Representatives Speaker Kevin McCarthy to share updated information on the debt limit.

Recalling that she stated that she will continue to update Congress as information becomes available in her previous letters, Yellen said, “Based on the latest available data, it is estimated that the Treasury will have insufficient resources to meet the government’s obligations unless Congress increases or suspends the debt limit by June 5th. we do,” he said.

Stating that more than $130 billion of planned payments will be made in the first two days of June, Yellen pointed out that these payments will leave the Treasury with extremely low levels of resources.

Yellen noted that an estimated $92 billion in payments and transfers is planned for the week of June 5, so the Treasury’s anticipated resources will not be sufficient to meet these obligations.

Extraordinary measures are taken

Informing that an additional measure was used yesterday in some debt limit events in the past, Yellen underlined that the extremely low level of remaining resources requires the government to take all available extraordinary measures to avoid default.

Yellen recalled that they learned from past debt limit stalemates that waiting until the last minute to suspend or raise the debt limit can seriously damage business and consumer confidence, increase short-term borrowing costs for taxpayers, and adversely affect the United States’ credit rating.

“If Congress fails to raise the debt limit, it will cause serious difficulties for American families, undermine our global leadership position and raise questions about our ability to defend our national security interests,” Yellen said. awakens the signs,” he said.

“I continue to urge Congress to take action as soon as possible to protect the reputation of the United States,” Yellen said.

In addition to McCarthy, Secretary of the Treasury Yellen’s letter was sent to House Minority Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell.

Analysts said that Congress’ failure to raise the debt limit before June 5 could trigger a default that would shake financial markets and plunge the US economy into a deep recession.

Yellen had previously warned that debt-limiting measures could be exhausted by June 1, and the country could run out of cash after that date.

debt limit dilemma

In the US, the federal government has reached the $31.4 trillion debt limit that could lead to default.

The debt limit, or debt ceiling, means “the upper limit on the amount of money the U.S. government can borrow to pay off its debts.”

There are concerns that exceeding the debt limit will seriously damage the US economy.

It is stated that even exceeding the mentioned limit for a short time may lead to a decrease in real gross domestic product (GDP), the loss of approximately 2 million jobs, the unemployment rate to rise from the current 3.5 percent to about 5 percent, and an increase in borrowing costs.

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