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The US Debt Ceiling Crisis - Janet Yellen Sounds The Alarm US Could Run Out Of Cash By June 1

The US debt ceiling crisis is increasing as the country's Treasury Department approaches the limit of its borrowing capacity.

Hajra Shannon
May 03, 2023684 Shares56997 Views
The US debt ceiling crisisis increasing as the country's Treasury Department approaches the limit of its borrowing capacity.
Janet Yellen, the Treasury Secretary, has warned that the US government could run out of cash by 1 June 2023, unless Congress agrees to raise the debt limit.

What Is The Debt Ceiling?

The debt ceiling is the maximum amount of money that the US government is authorized to borrow. The government must seek Congressional approval to increase the debt ceiling whenever it reaches its limit.
Failure to do so would lead to a default on US government bonds, which would have severe consequences for the country's credit rating and financial stability.

Yellen's Warning

In a letter to House Speaker Kevin McCarthy, Yellen warned that the government would be unable to meet its financial obligations unless the debt ceiling is raised.
Yellen stated that the Treasury Department's ability to borrow money would be exhausted by 1 June 2023, unless Congress acts soon.

US could hit debt limit by June 1, Janet Yellen warns

The Debt Limit Date And Consequences

The current debt limit date is set for August 1, but Yellen warned that the Treasury Department's measures to avoid default may run out by June 1, leaving the country without sufficient funds to meet its obligations.
If the debt ceiling is not raised, the government would be forced to default on its debts, which would have serious consequences for the US economy and the global financial system.

Political Standoff And Possible Solutions

The debt ceiling has become a political football in recent years, with lawmakers on both sides of the aisle using it as leverage to push their agendas.
Republicans have traditionally been more resistant to raising the debt ceiling, citing concerns about government spending, while Democrats have been more willing to raise the limit to avoid default.
Yellen has called on Congress to take action to raise the debt ceiling as soon as possible, warning that the consequences of inaction could be catastrophic.
Democrats have proposed raising the debt ceiling as part of a larger infrastructure bill, but Republicans have so far been resistant to this approach.

History Of Debt Ceiling Crisis

The US has faced debt ceiling crises in the past, with the most recent occurring in 2019. The government was forced to shut down for 35 days, the longest in US history, as Democrats and Republicans were unable to reach an agreement on raising the debt ceiling.
The 2011 debt ceiling crisis led to a downgrade of the US credit rating by Standard & Poor's for the first time in history, and caused turmoil in global financial markets.

Final Thoughts

The US debt ceiling crisis is a serious issue that has the potential to cause significant harm to the US economy and the global financial system.
While there is no easy solution to this complex problem, it is important for lawmakers to put aside their political differences and work together to find a solution that will protect the country's financial stability.
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