I wrote this in a letter to House Speaker Kevin McCarthy. The US Congress sets debt ceilings at irregular intervals and limits how much money the government can borrow. The debt ceiling has so far reached $31.4 trillion (about 29 trillion euros). However, this limit was already reached in January. If the debt ceiling is not raised, the US government may not be able to meet all of its financial obligations within a few weeks.
The Ministry of Finance has since taken “extraordinary measures” to keep spending without exceeding the maximum. When the Treasury began using these accounting tools, Secretary Yellen did indicate that it was highly uncertain how long these tools would last. It said Monday it could run out of cash as early as June 1. Economists previously believed the US could foot the bill until August.
Yellen therefore called on Congress on Monday to “take action as quickly as possible.” If the debt ceiling is not raised, it will not be possible to pay civil servants' wages and benefits will not be paid. The creditworthiness of the United States is also at stake. Economists fear that this will turn financial markets upside down.
Negotiation
Therefore, US President Joe Biden agreed to meet with Republican US House of Representatives Speaker Kevin McCarthy and other congressional leaders next week. The meeting, scheduled for May 9, is considered the “first sign of progress” when it comes to debt ceiling negotiations, according to Bloomberg News.
American media indicate that the debt ceiling has been raised, extended or revised at least 78 times since 1960. Biden stressed on Monday that never in the country's more than 200-year history has America been unable to meet its financial obligations.
Republicans did agree to increase the debt ceiling last week, but McCarthy countered that with a whole series of cuts in government spending. Biden refused to agree to this, because the cuts would make some of his policy plans impossible.
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