China News Service, January 14th, a comprehensive report. The U.S. Treasury Department stated on the 13th local time that the U.S. government is expected to reach the debt ceiling on the 19th of this month, calling on Congress to take timely action to prevent the U.S. from defaulting, otherwise it will have a negative impact on the economy, people’s livelihood, and even serious impact on global financial stability.
alarm sounds, U.S. Treasury Secretary urges Congress to act
U.S. Treasury Secretary Yellen wrote to Congress that the U.S. government is expected to reach the statutory debt ceiling on January 19, and the Treasury Department will "take extraordinary measures to prevent the U.S. from defaulting."
Data map: U.S. Capitol.
Yellen said that these "unconventional measures" can only be maintained for a limited time and may be affected by greater uncertainty.
A series of measures and existing funds are expected to last until early June this year, and she called on Congress to "act in a timely manner" to raise or suspend the debt ceiling.
It is reported that the debt ceiling is the maximum limit set by the US Congress for the federal government to borrow money, including Social Security and Medicare, military pay and so on.
The current cap is about $31.4 trillion set for the end of 2021.
Hitting the debt ceiling means that the US Treasury Department's borrowing authority has been exhausted, the government faces a "technical default", and the federal government will also face the risk of a shutdown.
Yellen warned that failure to meet government obligations would cause "irreparable harm" to the U.S. economy, American livelihoods and global financial stability.
The "barbaric growth" of U.S. debt , the two parties face greater challenges
The "barbaric growth" of
U.S. debt , the two parties face greater challenges
In October 2022, the debt scale of the U.S. federal government exceeded 31 trillion U.S. dollars. Against the background of the U.S. government’s continued expansion of fiscal expenditures and the Federal Reserve’s continuous interest rate hikes, U.S. government debt has “grown wildly.”
Data map: U.S. dollars.
Historically, in order to solve the debt default limit problem, the U.S. Congress has raised the debt ceiling hundreds of times so that the Treasury Department can meet existing payment obligations by issuing new debt.
The most recent increase in the debt ceiling will occur in 2021.
At the end of October of that year, the U.S. federal government hit the then-US$28.9 trillion debt ceiling. Since then, the U.S. Treasury Department has taken unconventional measures to avoid debt default. It was not until December that Congress passed legislation to raise the debt ceiling to US$31.4 trillion. crisis.
After the opening of the new US Congress at the beginning of this year, with the Democrats controlling the Senate and the Republicans regaining control of the House of Representatives, the debate on raising the debt ceiling may become more intense.
The US "Politician" News Network reported on the 13th that the background of Yellen's open letter is that the two parties in the United States are at odds over the debt ceiling issue.
House Speaker McCarthy has previously said Republicans intend to demand deep cuts to the federal budget as a condition of negotiations for raising the debt ceiling.
The White House said on the 13th that it would not make any concessions or negotiate on raising the debt ceiling.
White House Press Secretary Karina Jean-Pierre said, "This is not a political game and should be played without conditions."
U.S. media analyzed that even if the United States does not experience a technical default and is forced to take unconventional measures to repay the arrears, it may lead to a repeat of the market turmoil in 2011: At that time, the U.S. staged a debt ceiling dispute, and Congress reached an agreement two days before the debt ceiling expired , but still sent stocks plunging and brought the credit rating of U.S. debt down for the first time.
Economists at Goldman Sachs said last month that there could be a debt-ceiling battle in the U.S. that "shocks financial markets."
The turmoil on Wall Street could also lead to losses in the retirement accounts and portfolios of ordinary Americans.