Treasury Secretary Janet Yellen warned Congress on Friday that if US lawmakers cannot raise or extend the debt ceiling before August 2, her department will have to take “unconventional measures.”
In a letter to the Speaker of the House of Representatives Nancy Pelosi, Yelondon urged leaders to raise the federal debt ceiling as soon as possible, otherwise they would face the risk of “irreparable harm to the U.S. economy and the livelihoods of all Americans.”
The debt ceiling does not directly affect government spending, but it limits the amount of debt that the government can assume.
The Ministry of Finance often takes so-called “unconventional measures” to avoid breaching the debt limit.The U.S. has so far Never breached On its debt.
However, recent history shows that approaching it uncomfortably can cause confusion. In 2011, Republicans in the House of Representatives refused to pass an increase in the debt ceiling, which led to the downgrade of the US sovereign credit rating and disrupted financial markets. CNBC reported.
“Even the threat of failure to fulfill these obligations has had adverse effects in the past, including the only credit rating downgrade in the country’s history in 2011,” Yellen wrote in a letter to Pelosi. “That’s why the president or secretary of the Treasury of either party has never supported the proposal of the United States not to fulfill any obligations.”
Treasury debt defaults may overturn trillions of dollars of US global commercial and financial assets, triggering a financial crisis.
White House Press Secretary Jen Psaki said on Friday: “We certainly hope that Congress will act in a bipartisan manner, just as they raised the debt limit three times during the previous administration.”
