U.S. Treasury Secretary Janet Yellen (Janet Yellen) told lawmakers on Thursday (January 19) that the United States has begun to take “extraordinary measures” to avoid breaching the $31.4 trillion debt ceiling; The debate on how to avoid default on government fiscal obligations and global economic catastrophe.
Treasury Secretary Janet Yellen said she had begun suspending investments in the government’s public employee retirement fund and postal employee retiree health plans. The plans do not require immediate payments to beneficiaries, but she warned the measures were only a stopgap measure until June 5.
Yellen told key leaders in Congress they needed to raise the government’s debt ceiling or, perhaps less likely, remove spending limits. Removing spending restrictions is the practice of most countries in the world. The U.S. has raised its debt ceiling 78 times since 1960.The U.S. government routinely failed to balance its annual budget, often spending $1 trillion or more in excess of its tax revenue before hitting the debt ceiling set by Congress and agreed to by the then-president.
The U.S. has never violated its global financial commitments, such as to China, Japan, and other countries that buy U.S. bonds; nor has it defaulted on certain taxpayer programs, such as pension and health care payments to older Americans.But political debate in the U.S. about raising the debt ceiling to cover spending already approved by Congress and successive presidents has often been intertwined with heated discussions about future spending, leading to an impasse as spending approaches the debt ceiling.
There was a deadlock like this in 2011. Then-Democratic President Barack Obama finally struck a deal with Republican opposition in Congress that raised the debt ceiling while limiting government spending for much of the past decade.Now, Republicans in the House of Representatives, who just won a narrow majority, are also calling for future spending cuts to keep discretionary federal spending by government agencies in 2024 at 2022 levels.
House Speaker Kevin McCarthy told reporters this week, “I don’t understand why the behavior of the past continues.”But the White House appeared to be looking back, calling instead for a “clean vote” on raising the federal debt ceiling, which has nothing to do with total new spending. President Joe Biden says he won’t limit pension and health care aid for older Americans.
“Americans have every right to expect that Congress will act like As always, united in a bipartisan fashion to ensure we put the American economy on this stable path.” The White House has not engaged in any negotiations with congressional leaders.
If the government defaults and has essentially no money to service its debt, payments to U.S. bondholders, foreign governments and U.S. individuals will be delayed until the new debt ceiling is reached. Salaries of government workers and monthly payments to pensioners and health care providers will also be delayed.
Also, the US credit rating could be downgraded and the stock market could be as volatile as it was in 2011.
Yellen warned that Congress needs to act to avoid such financial turmoil. Yellen told congressional leaders, “The likely duration of extraordinary measures is subject to considerable uncertainty, including the challenge of forecasting the U.S. government’s payments and receipts in the coming months. I respectfully urge Congress to act quickly, Fully protect the confidence and credibility of the United States.