US Treasury Secretary Janet Yellen urged Congress to take “immediate action” to increase or suspend the debt limit, saying the country is expected to reach its debt limit on January 19.
US Treasury Secretary Janet Yellen has written a new letter to the Speaker of the US House of Representatives, Kevin McCarthy, regarding the debt limit.
In the letter in question, Yellen wrote, “I am writing to inform you that as of January 19, it is estimated that the US outstanding debt will reach the legal limit.” used the phrase.
Recalling that the legal debt limit was increased to approximately $31.4 trillion on December 16, 2021, Yellen said, “When the limit is reached, the Treasury will have to start taking some extraordinary measures to prevent the United States from defaulting.” made its assessment.
Yellen said the debt limit is the total amount of debt the government is authorized to take to meet its current legal obligations, including social security and Medicare subsidies, military salaries, interest on the national debt, tax rebates and other payments.
Stressing that it is critical for Congress to take timely action to increase or suspend the debt limit, Yellen said, “I urge Congress to take immediate action to preserve the full trust and reputation of the United States.” used the phrase.
Yellen also warned that the failure of the government to meet its obligations could cause irreparable damage to the US economy, the livelihoods of all Americans and global financial stability.
DEBT LIMIT CRISIS
In the US, the federal government is threatened with reaching the $31.4 trillion debt limit, which could lead to default.
The debt limit refers to the upper limit on the amount of money the US government can borrow to pay off its debts.
Technically, the deadline for the debt limit expired on August 1, 2021, while the US Treasury Department began taking “extraordinary measures” so that the government could continue with its payments.
In October 2021, US President Joe Biden approved the bill for a short-term increase in the debt limit, which was prepared to prevent the government from defaulting. The bill, which became law with the approval of the President, increased the debt limit by 480 billion dollars. Thus, the debt limit increased from $28.4 trillion to $28.9 trillion.
The country’s debt limit was increased by another $2.5 trillion in December 2021, which would be sufficient until 2023, to $31.4 trillion, and the US was prevented from defaulting.