In an opinion column published today in the financial daily The Wall Street Journal in New York, Yellen warned that if an increase in debt is not approved there is a risk that “the government will not be able to pay its bills.”
“Congress has raised or suspended the nation’s debt ceiling about 80 times since 1960. Now it must do it again. Otherwise, sometime in October (it is impossible to predict precisely when) the cash balance of the Department of the Treasury will fall to an insufficient level and the federal government will not be able to pay its bills, “Yellen wrote.
The Secretary of the Treasury described that “the United States has always paid its bills on time, but the overwhelming consensus among economists and Treasury officials on both sides is not to raise the debt ceiling. would produce a general economic catastrophe. In a matter of days, millions of Americans could be in trouble with cash. We could see indefinite delays on critical payments. Nearly 50 million seniors could stop receiving Social Security checks for a time. Troops could be left without pay. Millions of families who depend on the monthly child tax credit could experience delays. The United States, in short, would fail to meet its obligations. “
Later, the official remarked that “the United States has never defaulted. Not once. Doing so would likely precipitate a historic financial crisis that would exacerbate the damage from the continuing public health emergency. Failure to comply could trigger an increase in interest rates, a sharp drop in stock prices, and other financial turmoil. Our current economic recovery would turn into a recession, with billions of dollars of growth and millions of lost jobs. “
Yellen insisted that “we can borrow at a lower price than almost any other country, and default would jeopardize this enviable fiscal position. It would also make the United States a more expensive place to live, as the higher cost of borrowing it would fall to consumers. Mortgage payments, auto loans, credit card bills – anything you buy on credit would be more expensive after default. “
In another paragraph in her column, Yellen explained that “raising the debt ceiling does not authorize additional spending of taxpayer dollars. Instead, when we raise the debt ceiling, we are effectively agreeing to increase the credit card balance. The country’s credit, and in this case 97% of that balance was incurred by previous congresses and presidential administrations. Even if the Biden administration had not authorized any spending, we would still have to address the debt ceiling now. Pay the bills The United States should not be a controversial issue, and during the previous administration, Congress suspended the debt ceiling three separate times with bipartisan support and without much fanfare. For this reason, I am confident that our legislators will address the debt ceiling. the debt once again, but they must act quickly. “
Finally, the Secretary of the Treasury stressed that “neither delay nor default is tolerable. The last 17 months have put our nation’s economic strength to the test. We are just emerging from the crisis. We must not plunge back into a completely avoidable one.” .
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