The US Treasury: entering into an imminent recession due to the debt ceiling crisis
The US Treasury said, on Monday, that the US economy is strongly likely to enter a state of recession, due to the exacerbation of the debt ceiling crisis in the country.
This came in statements made by Deputy Treasury Secretary Wally Adeyemo to CNN, with the approaching date of the federal liquidity runout, which expected in the middle of next month, according to the Treasury Department.
Adeyemo stated that the hypothesis that Congress failed to raise the debt ceiling this month, means that we will enter a recession… and that will be disastrous for the US economy.
He pointed out that failure to raise the debt ceiling means that the United States will default on payments on it, such as bonds, loans, wages for workers and retirees, health care and the army.
Later this week, US President Joe Biden will meet with prominent leaders in Congress, in a new round of negotiations to raise the debt ceiling.
For weeks, politicians, bankers and the White House have been warning that the United States is on the verge of a default that threatens dire consequences, including a recession.
On January 19, the United States exceeded the debt ceiling set by $ 31.4 trillion, while it is prohibited to exceed it without approval from the Republican-controlled House of Representatives.
The debt ceiling, also called the debt limit, is the maximum total amount of money the federal government is allowed to borrow through the US Treasury, such as bonds and savings bonds.
The reason for this borrowing is to meet the financial obligations of the US government, because the United States suffers from a budget deficit, so it has to borrow huge sums to pay its bills.