US Treasury Secretary warns of default risk in the country

Treasury Secretary Janet Yellen, in a letter to House Speaker Kevin McCarthy, warned that after reviewing recent federal tax revenues, the federal state will not be able to continue to meet all of the government's obligations by June 1. She also stressed that the timing of the default remains uncertain, despite the previously announced June 1 date.

In this letter, the Secretary of the Treasury asked Congress to raise the national debt ceiling before this date or suspend its implementation to prevent such a situation. Earlier, on April 25, Yellen warned that the failure of Congress to raise the US debt ceiling and the subsequent bankruptcy would lead to an "economic disaster" that would destroy jobs and raise interest rates on mortgages, auto loans and credit cards. Janet Yellen says: "Increasing or suspending the $31.4 trillion borrowing limit is a 'primary responsibility' of Congress.

A default would jeopardize the economic progress the United States has made since the COVID-19 pandemic." In January 2023, she told lawmakers that the US government could only pay its bills until early June without increasing the limit the government reached in January. Unlike many developed countries, the US imposes strict limits on public debt. As the US government spends more than it receives, lawmakers must periodically raise the debt ceiling. On January 19, 2023, the US national debt exceeded the legal ceiling of $31.4 trillion.
 
The issue of US federal government debt, which reached more than $32.7 trillion by May 2, 2023, and the need to raise the debt ceiling to prevent default has been the subject of tension for years. and extortion of Congress from the White House at a time when the House of Representatives is in the hands of the opposition party. In the Biden administration, this scenario is repeating itself. Republicans, who make up the majority in the House of Representatives, demanded concessions and the fulfillment of their desired conditions in order to agree to a higher debt ceiling and prevent the federal government from defaulting. This scenario happened earlier during Donald Trump's rise to power.
 
In 2018, due to the rejection of the conditions put forward by Democrats in the then-majority House of Representatives, especially the White House's position against the construction of the border wall, the federal government was closed for about a month. This shutdown, which was the second federal government shutdown, lasted from December 2018 to January 2019. As a result, 9 US federal executive departments, which employed about 800,000 people, were forced to close completely or partially, which affected a quarter of federal agencies. It was the longest period of US government shutdown.