President Biden spoke about the devastating consequences for the US in the event of a possible default
President Joe Biden held talks with congressional leaders on the economic situation in the country. He spoke about the results of the meeting in an interview with journalists, reports RIA News.
Consequences of a default
Biden warned of the possible consequences of a US default and called them devastating to the country’s economy. At the same time, the Speaker of the House of Representatives, Republican Kevin McCarthy, after a meeting with the president, said that the leaders of Congress had not made any progress on the issue of raising the national debt ceiling. Exceeding the limit threatens with difficulties in paying social expenses, as well as debts and interest on obligations already taken.
I don’t know what McCarthy, Speaker McCarthy, is thinking. I think he knows better. And I think he knows default will be devastating.
In the same speech, the head of state spoke about the need to avoid default in the US. To avoid it, he did not rule out any measures “other than the default itself.” The American leader also allowed a short-term increase in the national debt ceiling. “I do not exclude anything,” he stressed.
The President expressed his readiness to discuss with the leaders of the Congress the priorities of government spending, but not under the threat of a default. He announced the continuation of the discussion on Friday, May 12, and was pleased to see the intention of the congressmen to avoid a crisis.
Crisis Threat
US Treasury Secretary Janet Yellen warned Congress in January that the Treasury would be forced to take extraordinary measures due to an estimated debt ceiling of $31.381 trillion. She also reported that the country was at risk of default in June.
31.4
trillion dollars
is the US government debt limit
The head of the Ministry of Finance stated that the department was running out of ways to help avoid a default in the country. According to her, the ministry has been using extraordinary measures for several months, but they have almost exhausted themselves. She also commented on the timing of the default in the country and stated inaccuracies in the assumptions.
We predict that we will run out of money in early June. There is a chance that this will happen on June 1st. Of course, there is considerable uncertainty
In turn, Senator McCarthy called the draft US budget for fiscal year 2024 frivolous. In his opinion, high debt threatens inflation. McCarthy also likened the problem to a ticking bomb that would go off for lack of action. In his opinion, Biden “did nothing” to prevent a financial crisis.
Solutions
Back in January, White House press secretary Karine Jean-Pierre urged Republicans in the US Congress to support another unconditional increase in the US national debt ceiling. From 1997 to 2022, this figure has been adjusted 22 times. However, Republicans are proposing to raise the national debt ceiling amid spending cuts.
Related materials:
On April 27, the US House of Representatives approved a bill to raise the national debt ceiling by $1.5 trillion in exchange for a sharp cut in spending. Document representatives of the Republicans. 217 members of Congress supported the initiative, while 215 members of the House of Representatives opposed it. The document was sent for consideration to the Democratic-controlled Senate.
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