US Secretary of the Treasury Janet Yellen on Monday notified Congress that the US could default on its debt as early as June 1, if legislators do not raise or suspend the nation’s borrowing authority before then and avert what could potentially become a global financial crisis.
In a letter to House of Representatives and Senate leaders, Yellen urged them “to protect the full faith and credit of the United States by acting as soon as possible” to address the US$31.4 trillion limit on its legal borrowing authority.
She added that it is impossible to predict with certainty the exact date of when the US would run out of cash.
Photo: Reuters
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” Yellen said in the letter.
Also on Monday, the Congressional Budget Office reported that it saw a greater risk of the US running out of funds early next month.
Congressional Budget Office Director Phillip Swagel said because of less-than-expected tax receipts this filing season and a faster Internal Revenue Service having processed already received returns, “Treasury’s extraordinary measures will be exhausted sooner than we previously projected.”
Yellen in January sent a letter to congressional leaders, stating that her department had begun resorting to “extraordinary measures” to avoid a federal government default.
The US Department of the Treasury on Monday said that it plans to increase its borrowing during the second quarter of this year, even as the federal government is close to breaching the debt limit.
The US plans to borrow US$726 billion during the quarter. That is US$449 billion more than projected in January, due to a lower beginning-of-quarter cash balance and projections of lower-than-expected income tax receipts and higher spending.
While Russia’s invasion of Ukraine remains a burden on US economic growth, officials say the debate over the debt ceiling poses the greatest risk to the US financial position.
Acting US Assistant Secretary for Economy Policy Eric Van Nostrand said in a statement that “even if Congress ultimately raises the debt limit before a default occurs, the ensuing uncertainty could raise borrowing costs and induce other financial stress that would weaken our labor market and our standing in the world.”
“There is no time to waste,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center, which forecasts the so-called “X-date” when the US government exhausts its extraordinary measures.
His organization would provide an updated X-date projection in the coming days, Akabas said.
“The US government is again within mere months or even weeks of failing to make good on all its obligations. That is not a position befitting of a country considered the bedrock of the financial system, and only adds uncertainty to an already shaky economy,” he said.
Democrats and the White House are pushing for the US Congress to increase the federal debt limit.
US President Joe Biden wants the cap raised without negotiation. The House Republican majority has passed a bill to secure spending cuts in exchange for a debt limit increase.
Biden on Monday invited the four Congressional leaders to the White House on Tuesday next week to discuss the matter.
Yellen last week said at the Cap-to-Cap policy conference in Washington: “Congress must vote to raise or suspend the debt limit, and it should do so without conditions and it should not wait until the last minute. I believe that is a basic responsibility of our nation’s leaders to get this done.”
DIALOGUE: US president-elect Donald Trump on his Truth Social platform confirmed that he had spoken with Xi, saying ‘the call was a very good one’ for the US and China US president-elect Donald Trump and Chinese President Xi Jinping (習近平) discussed Taiwan, trade, fentanyl and TikTok in a phone call on Friday, just days before Trump heads back to the White House with vows to impose tariffs and other measures on the US’ biggest rival. Despite that, Xi congratulated Trump on his second term and pushed for improved ties, the Chinese Ministry of Foreign Affairs said. The call came the same day that the US Supreme Court backed a law banning TikTok unless it is sold by its China-based parent company. “We both attach great importance to interaction, hope for
RISING TENSIONS: The nations’ three leaders discussed China’s ‘dangerous and unlawful behavior in the South China Sea,’ and agreed on the importance of continued coordination Japan, the Philippines and the US vowed to further deepen cooperation under a trilateral arrangement in the face of rising tensions in Asia’s waters, the three nations said following a call among their leaders. Japanese Prime Minister Shigeru Ishiba, Philippine President Ferdinand Marcos Jr and outgoing US President Joe Biden met via videoconference on Monday morning. Marcos’ communications office said the leaders “agreed to enhance and deepen economic, maritime and technology cooperation.” The call followed a first-of-its-kind summit meeting of Marcos, Biden and then-Japanese prime minister Fumio Kishida in Washington in April last year that led to a vow to uphold international
US president-elect Donald Trump is not typically known for his calm or reserve, but in a craftsman’s workshop in rural China he sits in divine contemplation. Cross-legged with his eyes half-closed in a pose evoking the Buddha, this porcelain version of the divisive US leader-in-waiting is the work of designer and sculptor Hong Jinshi (洪金世). The Zen-like figures — which Hong sells for between 999 and 20,000 yuan (US$136 to US$2,728) depending on their size — first went viral in 2021 on the e-commerce platform Taobao, attracting national headlines. Ahead of the real-estate magnate’s inauguration for a second term on Monday next week,
CYBERSCAM: Anne, an interior decorator with mental health problems, spent a year and a half believing she was communicating with Brad Pitt and lost US$855,259 A French woman who revealed on TV how she had lost her life savings to scammers posing as Brad Pitt has faced a wave of online harassment and mockery, leading the interview to be withdrawn on Tuesday. The woman, named as Anne, told the Seven to Eight program on the TF1 channel how she had believed she was in a romantic relationship with the Hollywood star, leading her to divorce her husband and transfer 830,000 euros (US$855,259). The scammers used fake social media and WhatsApp accounts, as well as artificial intelligence image-creating technology to send Anne selfies and other messages
RSS