The US treasury is rapidly depleting. US Treasury Secretary Janet Yellen wrote in a letter to political leaders within Congress on Wednesday that the US government’s debt ceiling will be reached in October. Yellen fears major problems if Congress does not raise the debt ceiling soon.
The debt ceiling is the maximum amount of money the US government is allowed to borrow. It has been the subject of frequent political struggle in recent years. Opposition Republicans in Congress used cover under former Democratic President Barack Obama as leverage to force political concessions. For their part, Democrats initially refused to agree to a higher debt ceiling in 2019, when Republican Donald Trump was president.
After heated political confrontations with Closure – Temporary government shutdown – the limit was increased each time to the current level of 28,400 billion US dollars (24,000 billion euros).
With President Joe Biden’s administration spending heavily to boost economic growth and improve infrastructure, the size of the national debt has once again become so large that the latest debt ceiling, agreed in July, is nearly reached. Yellen writes in the letter that accounting tricks (“extraordinary measures” in Yellen’s words) have so far allowed the government to stay within the cap, but the sprawl is over.
She warned Republicans not to let it shut down. This time, the financial situation is so serious that the US government may no longer be able to meet its obligations, she writes. The creditworthiness of the United States will then be compromised, which will increase borrowing costs for consumers as well. Yellen said it would cause “irreparable damage” to the economy. (AFP)
A version of this article also appeared in NRC Handelsblad on September 9, 2021
A version of this article also appeared on NRC on the morning of September 9, 2021
