US Treasury Secretary Janet Yellen testifies on June 23, 2021 in front of the Senate Expenditure Subcommittee on Financial Services about the 2010 financial budget request at Capitol Hill, Washington, DC.
Greg Nash | Pool | Reuters
Treasury Secretary Janet Yellen Congress told House Speaker Nancy Pelosi on Tuesday that Congress would spend less than three weeks addressing the looming debt cap and avoiding an almost certain economic disaster.
“We now estimate that if Congress does not raise or suspend its debt limits by October 18, the Treasury is likely to do its extraordinary steps,” she said. I wrote in a letter. “At that point, the Treasury has very limited resources left and we expect it to be exhausted soon.”
Yellen, who testifies in the Senate late Tuesday morning, Warning in another statement to lawmakers Failure to suspend or raise debt caps will lead to the first-ever US default and will have serious consequences for the US economy.
“It is imperative that Congress respond quickly to debt limits, otherwise the United States will default for the first time in history,” she said in a statement to the Senate Banking Commission. “Our country is likely to face a financial crisis and recession, undermining the full confidence and credibility of the United States,” he said.
Since the United States has never defaulted, economists must rely on forecasts and speculations when estimating the economic fallouts that defaults result. Still, most economists say such defaults will result in financial disasters that can lead to widespread market sellouts and recessions in the midst of soaring interest rates.
Yellen’s letter to Democratic Pelosi is the latest in a series of communications between the Treasury Secretary and parliamentary leaders when the United States is about to miss payments to its debtors. A spokesman for the Speaker of the House did not immediately respond to the request for comment.
Pelosi and Senate Major Leader, Chuck Schumer, DN.Y. In recent weeks, it has called on Republicans to pass a suspension on debt caps as a bipartisan obligation.
“Now, minority leaders McConnell and McConnell are welcoming disasters they know are coming, so Republican celebrities, former Treasury Secretaries, business groups, and top economists are politicizing US health. He is joining the growing chorus of Americans demanding that they stop putting it. The economy. ” Pelosi’s office said last week before Yellen’s latest letter.
Senate Republican Party on Monday Blocked a bill to fund the government Suspend the US borrowing limit. The GOP opposed the bill approved by the House of Representatives because the Republican Party’s mission to leave it to the Democratic Party alone included a clause to suspend debt caps.
Republicans want Democrats to raise or suspend their debt caps by including a clause in the $ 3.5 trillion settlement bill.
Government financing and debt caps are separate issues.
If the legislator does not approve the new funding or spending bill, the US government will be closed at the end of September. In that case, the agency would have to send thousands of federal employees home and operate with limited capacity until funding resumes.
Failure to suspend or raise the US borrowing limit is seen as a greater economic threat, as it creates the first-ever default and immense economic turmoil.
Raising or suspending debt caps will not approve new federal spending, but the Treasury will be able to respect debt already incurred between the Trump and Biden administrations. Even if the Biden administration does not pass the new spending initiative in 2021, legislators still need to raise or suspend the cap.
The Republican Party has approved three such debt cap increases or suspensions during the Trump administration. Under that, the country’s debt increased by about $ 8 trillion.
Parliament must raise borrowing limit by October 18 Yellen warns
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