US Treasury Secretary Janet Yellen, in Washington on January 10, 2023 (GETTY IMAGES NORTH AMERICA/AFP/Archives/Kevin Dietsch)
The United States will reach the debt ceiling authorized by Congress next Thursday, Finance Minister Janet Yellen warned in a letter on Friday, which would force the Treasury to “take extraordinary measures” in order to avoid a default.
In her letter, addressed to the Republican Speaker of the House of Representatives, Kevin McCarthy, Ms. Yellen stressed that from Thursday and in the absence of a new ceiling, the Treasury “is preparing to put in place as of this month” the first measures, which will concern several pension funds for public service employees.
The Treasury Secretary, however, warned that these measures could only be temporary and that if Congress failed to agree, the United States could find itself in a situation of default.
“Failure to meet government obligations would cause irreparable damage to the American economy and the livelihoods of all Americans as well as to global finance,” Yellen insisted in her letter.
After the publication of the letter, the rates of short-term US government bonds also jumped, a sign of renewed nervousness in the market.
The yield on one-month Treasury bills rose to 4.43%, its highest level in more than 15 years (September 2007). It had already climbed a lot in recent months due to the monetary tightening of the American central bank (Fed).
The Republican majority in the House of Representatives could play the clock on the subject, to try to force the Democrats to reverse certain expenditures voted before its installation.
“Spending is out of control, there’s been no oversight and it can’t go on like this,” Mr. McCarthy told reporters on Thursday, “We need to change the way we recklessly spend money in this country and we’re going to make sure that’s what happens.”
On the Democratic side, elected Pennsylvania member Brendan Boyle, a member of the House budget committee, found Ms Yellen’s announcement “extremely worrying”, accusing the Republicans “of considering it normal to hold our economy hostage to impose extremist and unpopular reforms”.
The current limit, of $31.381 billion, was set by Congress in December 2021, after tense discussions between Republicans and Democrats, then the majority in both houses of Congress, shortly after midnight the day the previous limit was set. had to be reached.
Prior to that, lawmakers had raised or suspended the ceiling 78 times since 1960, most often without any particular difficulty.
© 2023 AFP
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