Yellen warned of “economic catastrophe” without action on US debt ceiling By Investing.com


© Reuters.

Investing.com – In an opinion column published by the Wall Street Journal on Sunday, US Treasury Secretary Janet Yellen urged Congress to raise or suspend the national debt ceiling, on pain of ” generalized economic disaster “.

Yellen noted that the United States has never defaulted, and said it must not do so now.

“The United States has always paid its bills on time, but the overwhelming consensus among economists and treasury officials on both sides is that failure to raise the debt limit would produce widespread economic catastrophe.”

In particular, she warned that a default “would likely precipitate a historic financial crisis that would worsen the damage from the lingering public health emergency”, leading to the suspension of social security payments, delays in monthly tax credits families and potentially forcing interest rate hikes that could send stocks plunging.

“There is no valid reason to invite such a result,” Yellen wrote. “We are just emerging from the crisis. We must not plunge back into a completely preventable crisis.”

Note that Senator Mitch McConnell, R-Ky, steadfastly refused to lend Republicans’ support for raising the debt limit, leaving Democrats with few options in a 50-50 split Senate.

Without action, raising the debt ceiling, it is possible that the Treasury will not be able to pay the nation’s bills during the month of October, which, according to the White House, would lead to deep cuts in the economy. state and local government budgets.

Note that raising the debt ceiling is something of an annual tradition in the United States… Indeed, Congress has raised or suspended the debt limit about 80 times since 1960, Ms. Yellen said.

And based on the fact that even during the Trump administration, Democrats agreed three times to suspend the debt ceiling, there’s a good chance it will be raised again this time around, even whether to expect debates before that.

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