2023-05-02 20:05:00
US Treasury Secretary Janet Yellen warns in a letter to Republican House Speaker Kevin McCarthy that the United States might face insolvency as early as June 1. The exact timing depends on when the capital reserves that have already been tapped will be exhausted. According to financial experts, a default would have a massive impact on the global economy and might plunge it into the next crisis. Yellen warned of this several times.
The background: With a narrow majority of 217 to 215 votes, the Republicans are blocking the increase in the debt ceiling if there are no concessions. Republicans want to get President Joe Biden to agree to cuts in climate protection investments and other government spending. In return, the US debt limit is to be raised by $1.5 trillion. “Speaker” McCarthy himself is under pressure from some arch-conservative Republicans, on whom he is dependent given the thin majority in the House of Representatives. This is not regarding new spending, but regarding those that have already been legally approved in the state budget. The debt ceiling of the USA is currently 31.4 trillion dollars (28.55 trillion euros) and has been exhausted, the state is not allowed to take out any new loans to cover its expenses. The debt limit was introduced in 2017, the idea behind it: to provide an incentive to reduce spending dynamics. Since then, it has been increased dozens of times because otherwise the money would have run out – even if Republicans and Democrats often reached agreements very late.
Biden made it clear once more on Monday that he did not want to be blackmailed. He invited McCarthy and other leaders of both parties in Congress to the White House on May 9th.
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