The US Treasury Secretary is skeptical about the country’s future. Janet Yellen (75) appeals to Congress to resolve to raise the debt limit as soon as possible. Government spending is coordinated with the upper limit.
In an opinion piece in the “Wall Street Journal” Yellen wrote that if the US could not meet its obligations, it would trigger a historic financial crisis.
“We would emerge from this crisis as a permanently weakened nation,” Yellen wrote. The creditworthiness of the USA has so far been a strategic advantage.
“Sometime in October” the US government will no longer be able to meet its payment obligations, she said, if no decisions are made by then.
Dispute between Democrats and Republicans
But neither the Democrats nor the Republicans apparently want to be solely responsible for raising their statutory debt limit again, writes “Spiegel”.
While the Democrats are shooting at Donald Trump (75) for having amassed an additional eight trillion dollars in debt during his tenure, the Republicans are pounding Joe Biden (78) and calling him an unsound spendthrift.
Now the consideration is in the room to link the debt with the aid money for hurricane victims and to the budget law. If this proposal were rejected by the Republicans, there would be a shutdown.
“Don’t allow spending policy”
The Democrats could have solved the problem single-handedly by putting the increase in their spending bill. This does not require the approval of the Republicans. But they also want to oblige the opposing party – just as they did under Trump.
The Republicans, on the other hand, do not want to go into that. “With a Democratic President, a Democratic Congress and a Democratic Senate, the Democrats have all the tools they need to raise the debt ceiling. Republicans will not allow any more ruthless, partisan tax and spending policies, ”said Republican Senator Mitch McConnell.
Meanwhile, the mood on Wall Street is tense. “The political machinations threaten to undermine the confidence of the financial markets,” said the investment expert Solita Marcelli of UBS Global Wealth Management.
A crisis caused by US government insolvency would worsen the economic damage from the ongoing coronavirus pandemic, stir markets and plunge the American economy into recession. Yellen believes that millions of jobs would be lost and interest rates would rise permanently. (man / SDA)