The pandemic has left the US economy in a precarious state, but another crisis is looming that could push the country into an economic catastrophe: the debt ceiling. With the government set to run out of cash in early June, if Congress fails to raise it, U.S. Treasury Secretary Janet Yellen has issued a dire warning of what could happen if action is not taken.
Debt Ceiling Looms- Warns Janet
In an exclusive interview with ABC News, Yellen issued a strong plea to Congress, urging them to act before the government runs out of cash in early June.
“The failure to raise the debt ceiling would create an unprecedented situation in American history, where the country would be incapable of fulfilling its obligations, including payments to Social Security recipients and Medicare providers, and interest payments due on the debt. The outcomes of such an event could be catastrophic, leading to extensive financial and economic turmoil.” Warns Yellen.
The stakes are high!
Last month, House Republicans passed a bill to raise the debt ceiling by $1.5 trillion, but it comes with the condition that President Joe Biden signs off on deep spending cuts. However, Biden has reportedly refused to engage in negotiations that tie spending cuts to the debt ceiling. This puts Congress in a tricky spot as the clock is ticking and the consequences of not raising the debt ceiling could be disastrous.
With the clock ticking, it’s up to Congress to come up with a solution before it’s too late. Biden is set to meet with Congressional leaders soon, and the stakes couldn’t be higher.