2023-05-02 09:05:16
The United States should raise the debt ceiling soon. US Treasury Secretary Janet Yellen fears that the country may no longer be able to meet all financial obligations on June 1. What is going on? And do we notice that too?
The US Congress sets a debt ceiling once in a while and determines how much money the government can borrow. At the moment, according to its own laws, the country cannot have more than 31.4 trillion dollars (almost 29 trillion euros) in national debt. Then the debt ceiling is reached.
In fact, that ceiling was already reached in January. But Congress took special measures that allowed it to continue spending money. It is difficult to estimate how long that will be possible, according to the US Treasury Secretary. But it is quite possible that the money will run out soon. That is why action must be taken as soon as possible, Yellen said Monday.
If the debt ceiling is not raised, this might have unpleasant consequences. In the US, civil servants can then whistle regarding their salary and benefits are no longer paid.
In addition, the American financial market is important for the international economy, because of the government loans that the country provides. Problems on the American market can therefore also have consequences for Europe. It is still difficult to say exactly what those consequences will be. We will only know that once the debt ceiling has actually been reached.
It has never happened in the history of the US that the country can no longer meet its financial obligations. However, the debt ceiling has been raised, extended or revised almost eighty times since the 1960s.
President Joe Biden will meet with several congressional leaders on May 9 to resolve the issues. The debt ceiling has long been a hot point of contention between Democrats and Republicans.
Senate Democrats have long wanted to raise the debt ceiling. But Republican Speaker of the House of Representatives Kevin McCarthy said last week that Republicans will only agree if there are some government spending cuts in return. Biden refused to agree to this, because those cuts make some of his policy plans impossible.
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