daily economic news
2023-01-16 11:23:38
Edited by Lu Ming every time
$31 Trillion Debt Sounds the Alarm! According to CCTV News on the 16th, on the 15th, Republicans in the House of Representatives once again urged the US government to cut spending. At the same time, U.S. Treasury Secretary Yellen notified Congress on the 13th that the U.S. government’s debt scale will hit the upper limit on the 19th. She called on Congress to take action as soon as possible to raise the debt ceiling again to avoid debt default.
House Republicans urge government spending cuts
According to CCTV News reported on the 16th,Chairman of the Oversight and Accountability Committee of the U.S. House of Representatives, Republican Comer urged Democrats and Republicans in the U.S. House and Senate on the 15th to agree to cut spending to avoid a U.S. debt default, and said that Democrats have a responsibility to agree to the Republicans’ push Related initiatives to cut spending.
The debt ceiling is the maximum amount of debt set by the U.S. Congress for the federal government to meet incurred payment obligations. Hitting this “red line” means that the U.S. Treasury Department’s borrowing authority has been exhausted. After raising the debt ceiling, the Treasury can issue new debt to meet existing payment obligations. The U.S. Congress passed legislation in December 2021 to raise the federal government debt ceiling to approximately $31.4 trillion.
Washington, D.C., Capitol Building.Image source: Xinhua News Agency
According to data from the U.S. Department of the Treasury website,As of the 11th of this month, the debt of the US federal government has exceeded 31.37 trillion US dollars.According to statistics from the Peter Peterson Foundation of the United States, the debt of more than 31 trillion US dollars is larger than the combined economic volume of China, Japan, Germany, and the United Kingdom. If this huge debt is apportioned to the American people, it is equivalent to $236,000 in debt per household, or $93,000 in debt per person. If every American household contributed $1,000 a month in repayments, it would take 19 years to pay off all the debt. With Democrats controlling the Senate and Republicans controlling the House of Representatives, the debate over raising the debt ceiling has intensified over partisan issues.
Yellen warns US government may be insolvent
According to the reference news network on January 15, citing the website of the German news TV channel on January 13, US Treasury Secretary Janet Yellen warned that the US government faces the risk of insolvency. In a letter to Congress, she asked lawmakers to raise the debt ceiling, or cancel it altogether, or the current debt ceiling will be hit on Jan. 19, the report said. After that, the Treasury must take “extraordinary steps” to keep the government solvent, she said in the letter.
As a result, the debt default could be delayed until early June, the letter said. Yellen warned that a default would irreparably damage the U.S. economy, the livelihoods of U.S. citizens and the stability of the global financial system.
Washington, D.C., Capitol Building.Image source: Xinhua News Agency
White House press secretary Karina Jean-Pierre warned Congress that raising the debt ceiling is non-negotiable. She stressed that the White House “will not be engaging in any negotiations” on this issue. She said that on the issue of raising the debt ceiling, the two parties have been cooperating, and “it should be”, “it should not be a political pawn”.
According to a report by the Daily Business News on the 14th, some economists expressed concerns about the negotiations between the House of Representatives and the White House on government debt. Nancy Vanden Houten, chief economist at Oxford Economics, said in an email to reporters that the new House of Representatives The speaker’s concessions to far-right Republicans in exchange for Republican House votes include including deep spending cuts in any legislation that raises the government’s debt ceiling.
“However, neither the Democrats who hold a majority in the Senate nor President Biden are likely to agree to such a cut, leading to a deadlock in negotiations,” Houten said.
Separately, the Associated Press reported that Senate Majority Leader Chuck Schumer and new House Democratic leader Hakeem Jeffries also said in a joint statement Friday that “extreme of Republicans could default on the government debt and plunge the U.S. into a deep recession, costing U.S. working families even more.”
“The presence of hard-line Republicans in the House of Representatives increases the likelihood of a crisis (government default) and while we do not think a default is the most likely outcome, it is not ruled out that the Treasury Department’s unprecedented measures could disrupt financial markets and have negative impacts on the economy. Negative impact.” Houten predicted to reporters.
In addition, Yellen’s “old subordinate”, the current Federal Reserve Chairman Powell may not be able to give Yellen too much support. At noon on Friday local time, the Federal Reserve released preliminary data on profits, expenditures and transfers to the Treasury Department for the 2022 fiscal year on its official website. Affected by the Federal Reserve’s own interest rate hikes, the agency’s operating data also experienced huge fluctuations.
According to the Federal Reserve’s report, according to preliminary statistics, the net profit in 2022 will be slightly more than 58 billion U.S. dollars, a sharp drop of nearly 50 billion U.S. dollars from the 107.9 billion U.S. dollars in 2021, which is almost “cut in half.” The main reason for this is that monetary policy makers in the United States have raised interest rates by 425 basis points in the past year.
From 2013 to 2022, the source of the funds handed over to the Treasury by the Federal Reserve: the official website of the Federal Reserve
The Federal Reserve disclosed that the funds actually handed over to the Treasury Department in 2022 will reach 76 billion U.S. dollars, but starting from September 2022, the vast majority of Federal Reserve Banks will enter a state of book losses, and by the end of 2022, the total amount of deferred assets will have reached 188 billion U.S. dollars. One hundred million U.S. dollars. In other words, given the current state of persistently high interest rates, the U.S. Treasury Department may have to wait a long time before seeing the Fed start “pumping money” again.
Daily Economic News Comprehensive Reference News Network, CCTV News, Everyjing.com (Reporter: Zheng Yuhang)
Cover image source: Xinhua News Agency
