US Treasury Secretary, Janet Yellen, has issued a warning that if Congress fails to raise the government's debt ceiling, it could result in an economic catastrophe". Speaking at a business event in Washington, Yellen stated that a default on US debt would lead to job losses and an increase in household payments on mortgages, auto loans, and credit cards. She emphasized that it is Congress' basic responsibility to increase or suspend the $31.4 trillion borrowing cap, and a default would undo the economic progress the US has made since the COVID-19 pandemic.
Yellen also warned that a default would increase the cost of borrowing, which would make future investments substantially more expensive. If the debt ceiling is not raised, US businesses will face deteriorating credit markets, and the government will likely be unable to issue payments to military families and seniors who rely on Social Security. Therefore, Congress must vote to raise or suspend the debt limit without any conditions and not wait until the last minute.
The US is unique in that it puts a hard limit on how much it can borrow, and because the government spends more than it takes in, lawmakers must periodically raise the debt ceiling. The Republican-controlled House of Representatives' leader, Kevin McCarthy, has floated a plan that would link $4.5 trillion in spending cuts with a $1.5 trillion increase in the debt cap, but the White House has rejected this proposal, insisting that the two issues should not be linked.
Financial markets are growing increasingly concerned about the standoff, sending the cost of insuring exposure to US debt to its highest level in a decade. Financial analysts have warned about the increasing risk of default. It is crucial that Congress acts swiftly to raise the debt ceiling and avoid any economic catastrophe that could lead to long-lasting consequences for the US and the global economy.
Social Plugin