The United States Treasury Department is facing the possibility of running out of cash to pay the government's debts as early as June 1 if Congress does not raise the federal debt limit. Treasury Secretary Janet Yellen has stated that failure to raise the $31.4 trillion debt limit would result in economic and financial catastrophe. Democrats and Republicans remain at odds over the need to raise the debt limit, with Republicans tying any increase to sweeping budget cuts. President Joe Biden insists that Congress has a constitutional duty to raise the debt ceiling without conditions.
Yellen has stated that there remains uncertainty about exactly when the Treasury will run out of cash to pay the government's bills and that she would keep Congress apprised of any change in the date. She has also confirmed that she will meet with senior Wall Street bankers next week to discuss the federal debt ceiling. Yellen views it as appropriate for the bankers to speak out about how the debate over the debt limit is affecting the U.S. economy.
Unlike most developed countries, the U.S. sets a ceiling on how much it can borrow. Because the government spends more than it takes in, lawmakers must periodically raise that cap. The U.S. president this week said he might have to skip travelling to Hiroshima to meet with G7 leaders next week, depending on developments in the debt ceiling stand-off.
Treasury Secretary Yellen has stated that there is no good option other than for Congress to raise the debt limit, as it has done nearly 80 times since 1960. She has urged Congress to focus on getting it done and is working full-time with other government officials to increase the federal borrowing limit. Yellen said Treasury might be able to provide more refined guidance on exactly when it would run out of cash to pay the government's bills as the date neared.
German Finance Minister Christian Lindner has warned that there is a risk to the global economy if U.S. politicians do not come to a "grown-up" decision to raise the federal debt ceiling. Lindner hopes that the parties will not be driven by partisanship and will make a decision that is in the best interest of the U.S. economy and the global economy.
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