US Treasury Secretary Yellen Recession Warning
US Treasury Secretary Janet Yellen said a potential US default due to failure to raise the debt limit could trigger a recession and disrupt critical government services.
Yellen spoke about the latest developments in the regional banking system and the ongoing debt ceiling crisis in the country at the Independent Community Bankers of America (ICBA) Capital Summit 2023 event held yesterday.
Yellen said that if the US public debt defaults, it could trigger a recession that would deprive millions of Americans of their income payments and cause many Americans to lose their jobs.
According to Yellen, the unprecedented economic and financial crisis could cause disruptions to many services, including air traffic control, law enforcement, border security, and national defense and telecommunications systems.
MCCHARTHY: A DEAL IS POSSIBLE
On the other hand, while there is little time left for the US federal government to reach its debt limit of $31.4 trillion and run out of cash, US President Biden met yesterday again with Congressional leaders at the White House.
Speaking to the press after the meeting, US House Speaker McCarthy noted that there is a lot of work to be done on the debt limit in a short time and said the meeting laid the foundation for future conversations.
Expressing that they need to find a way to cut spending, increase the debt limit and at the same time grow the country’s economy, McCarthy said the Republicans are trying to find a solution. “It is possible that we can reach an agreement by the end of the week,” McCarthy said.
DEBT LIMIT DIFFERENCE
In the US, the federal government has reached the $31.4 trillion debt limit that could lead to default.
The debt limit, or debt ceiling, means “the upper limit of the amount of money the US government can borrow to pay its debts.”
Republicans, who have a majority in the House of Representatives, favor major spending cuts in the debt limit negotiations. Democrats insist on raising the debt limit and reject Republican proposals to cut certain spending.
US President Joe Biden is expected to meet with congressional leaders on Tuesday to discuss the debt limit issue.