According to Janet Yellen, if Congress does not take action to raise or suspend the debt limit by early June, the government will likely be unable to meet all of its obligations. In a letter sent to congressional leaders, the US Treasury secretary urged lawmakers to act as soon as possible.
Yellen warned that if the debt limit is not raised, it will be disastrous for the country’s economy. She stressed that it would cause severe hardship for American families, damage America’s global leadership position, and raise doubts about the country’s ability to defend its national security interests.
Amid this concern, President Joe Biden and House Speaker Kevin McCarthy are preparing to meet at the White House to continue negotiations on a debt limit agreement. A US default would be unprecedented.
Biden stated that his action has been “unimpeachable” in the event of a potential default and cited his authority to unilaterally raise the debt ceiling using the 14th Amendment of the US Constitution, which states that the validity of the public debt cannot be questioned.
The country reached the $31.4 trillion debt limit at the end of January, prompting the Treasury Department to take extraordinary measures to continue paying the federal government’s bills. The US federal government is subject to statutory regulations governing the level of borrowing allowed. Once the limit is reached and options to pay the bills are exhausted, Congress must raise the debt ceiling so that the government can continue to borrow and meet its obligations.
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