United States may default on national debt after December 15

As it has done in the past, US Treasury Secretary Janet Yellen urged Congress to tackle the debt limit quickly to avoid a possible default on the country’s obligations.

US Treasury Secretary Janet Yellen told Congress on Tuesday that she may run out of room to maneuver to avoid a national debt default after Dec. 15.

In a letter addressed to Congressional leaders, Janet Yellen warned that the department she heads could be left from Dec. 15 with insufficient resources to continue funding the government.

The new date released by the secretary of the Treasury is 12 days after December 3, a time that she had previously fixed in a letter addressed to Congress, on October 18, reports the AP.

As she had done in the past, Janet Yellen urged Congress to tackle the debt limit quickly to avoid a possible default of the country’s bonds.

“To ensure the full faith and credit of the United States, it is critical that Congress raise or lift the debt limit as quickly as possible,” she said.

Janet Yellen warned that allowing the government to default on payment would be catastrophic and likely push the country into recession.

On October 13, the House of Representatives approved the increase in the federal public debt limit.

This approval, after that of the Senate, temporarily removed the scenario of the US entering into unprecedented default, due to the inability to obtain financing to service its debt, which would decimate its economy and have shock waves in the world.

The fact that this increase in the limit was limited in time until the beginning of December, meant that the problem would arise again before the end of the year.

In the letter released on Tuesday, the head of the US Treasury Department also clarified that the extra time [until December 15] reflects a more up-to-date estimate of government revenue and expenditure, which was also impacted by the investment plan infrastructure that US President Joe Biden signed on Monday.

This plan requires the transfer by the Treasury, by 15 December, of 118 billion dollars [about 104 billion euros] to the road fund.

Despite having “a high degree of confidence” that it can finance the US government until December 15th and complete the transfer to the fund, there are scenarios where the government will be left with insufficient resources to finance operations beyond December 15th, shot.

The need to raise or suspend the debt limit is just one of the budget issues facing Congress, as a budget must also be passed by December 3, when current interim financing measures run out, to avoid a government shutdown.

Democrats aim to pass $1.75 billion [about 1.5 billion euros] measures to expand the social safety net and address the threats of climate change.

Democratic majority spokeswoman in the House of Representatives, Nancy Pelosi, said she hoped that the body could pass the measure, which Republicans reject this week, and that it should also pass the Senate.

Source: with agencies


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