According to estimates by the independent budget office of the US Congress, the Washington government is threatened with default in the first two weeks of June unless the debt ceiling is raised. With the debt ceiling unchanged, there is a significant risk that the government will be unable to meet all of its commitments in the first two weeks of June, the Congressional Budget Office said on Friday.
If the debt ceiling is not raised or lifted before Treasury reserves are depleted, the government will have to default on some activities, default on its debt obligations, or both. However, if the so-called extraordinary measures by the Ministry of Finance are enough to finance the government’s business until June 15, the expectation of new tax revenues may give some room for manoeuvre. Then there is a threat of default by the end of July. More recently, Treasury Secretary Janet Yellen warned that such a failure was possible as early as June 1.
In the United States, Congress sets a debt ceiling at irregular intervals and determines how much money the state can borrow. In the meantime, the applicable debt ceiling has been reached in the US and the US Treasury Department needs to draw on reserves – because the US can no longer go into debt to pay its bills.
Republicans have so far opposed
To raise the debt limit, US President Joe Biden’s Democrats need Republicans in Congress. However, they oppose and demand cuts from Biden, for example, in the social sector. A first high-level meeting of congressional party leaders at the White House ended Tuesday without a result. Another meeting scheduled for Friday was postponed until next week. A major economy default would have devastating consequences for the US and the global economy. (dpa)