Last Update: May 02, 2023, 04:00 AM IST
In January, Yellen sent a letter to congressional leaders, saying that her department had begun resorting to “extraordinary measures” to avoid a federal government default. (Image: Janet Yellen/Twitter)
On Monday, the Congressional Budget Office reported that it saw a high risk of the US running out of money as early as June.
Treasury Secretary Janet Yellen informed Congress on Monday that the US could default on its debt as early as June 1 if lawmakers do not extend or suspend the country’s statutory borrowing authority earlier.
In a letter to House and Senate leaders, Yellen urged congressional leaders to “protect the full faith and credit of the United States by acting as soon as possible” to set a $31.4 trillion limit on its statutory borrowing authority. can be addressed. He said it is impossible to predict with certainty when the US will run out of cash.
“We have learned from previous loan limits that waiting until the last minute to suspend or increase loan limits can cause serious damage to business and consumer confidence, increase short-term borrowing costs for taxpayers, and increase the cost of United This could have a negative impact on the credit ratings of states,” Yellen said in the letter.
In addition, on Monday, the Congressional Budget Office reported that it saw a high risk of the US running out of money as early as June. CBO director Philip L. Swaggle said that due to lower-than-expected tax receipts this filing season and the faster IRS processing previously received returns, “Treasury’s extraordinary measures will come to an end sooner than we previously anticipated.”
In January, Yellen sent a letter to congressional leaders, saying that her department had begun resorting to “extraordinary measures” to avoid a federal government default.
The Treasury said on Monday it plans to increase its borrowing during the April to June quarter of this year, even as the federal government moves closer to breaching the debt ceiling.
The US plans to borrow $726 billion during the quarter. That’s up from the $449 billion estimated in January, due to lower beginning-of-quarter cash balances and lower-than-expected income tax receipts and higher spending projections.
While Russia’s invasion of Ukraine continues to weigh on US economic growth, Treasury officials say the debate over the debt ceiling is the biggest risk to US finances.
Eric Van Nostrand, acting assistant secretary for economic policy, said in a statement that “even if Congress ultimately raises the debt ceiling before default, the ensuing uncertainty could raise borrowing costs and induce other financial stress.” that stands in our labor market and our world.”
“There is no time to waste,” said Shai Akbas, director of economic policy at the Bipartisan Policy Center, which estimates the so-called X-date when the government ends its extraordinary measures. His organization will post an update in the coming days. X-Date will also provide projection, he says.
“The US government is again within months or weeks of failing to meet all of its obligations. This is not a fair situation for a country that is supposed to be the bedrock of the financial system, and only adds uncertainty to an already shaky economy.
Democrats and the White House are pushing Congress to raise the federal debt limit. President Joe Biden wants this limit to be increased without negotiation. The House Republican majority recently passed a bill to secure spending cuts in exchange for a debt ceiling increase.
Yellen told a cap-to-cap policy conference in Washington last week that “Congress must vote to raise or suspend the debt limit, and it must do so without conditions and it must not wait until the last minute.” I believe it is a fundamental responsibility of our nation’s leaders to fulfill this.”
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)
