US Treasury Secretary Janet Yellen warned Monday that the United States is at risk of defaulting on its debts as of the beginning of June, amid a dispute between Republicans and Democrats over raising the borrowing limit.
Last week, Republicans in the House of Representatives voted in favor of a plan to raise the national borrowing limit in parallel with drastic spending cuts, in the midst of a confrontation with Democratic President Joe Biden over excessive public spending.
The United States reached its borrowing ceiling of $31.4 trillion in January, and the Treasury Department took extraordinary measures to allow it to continue financing state activities.
Nevertheless, if Congress does not raise or suspend the debt ceiling before the extraordinary tools are exhausted, the country will risk defaulting on its obligations, with dire repercussions for the economy.
“Our best estimate is that we will be unable to continue to meet all of the government’s obligations by early June, possibly as early as June 1, if Congress does not raise or suspend the debt ceiling before that date,” Yellen said in a letter to Republican House Speaker Kevin McCarthy”.
“Given current projections, it is imperative that Congress move as quickly as possible to increase or suspend the debt limit in a manner that provides long-term certainty that the government will continue to make payments,” she added.
