US Debt Ceiling Crisis: Risk of Default, Chaos and Economic Disaster

The government of Joe Biden has warned that failing an agreement on an increase in the debt ceiling, the United States could no longer be able to meet their commitments from the beginning of June, which would put them in a situation of default, a first in the country’s history.

A default by the United States on its debt would cause “financial and economic chaos”, Treasury Secretary Janet Yellen warned on Sunday, as the Republican opposition still refuses to raise the debt ceiling unconditionally.

The government of Joe Biden has warned that without an agreement on an increase in the debt ceiling, the United States may no longer be able to meet its commitments from the beginning of June, which would put them in default, a first in the country’s history. For the American Minister of Finance, it would be “an economic and financial disaster”, she declared on the American channel ABC.

A risk of loss of 8 million jobs and a 6% drop in GDP

A ceiling is legally set on the public debt of the United States and can only be raised by a majority vote in Congress. Representatives room, in which the Republicans are in the majority, adopted a bill at the end of April providing for a strict framework for public spending in exchange for an increase in the ceiling. But the text has no chance of being adopted, as it stands, in the Senate, with a Democratic majority and US President Joe Biden has so far refused to negotiate possible concessions under pressure to ward off the specter of a default. He nevertheless invited the four leaders of the two major parties in Congress to the White House on Tuesday to discuss the matter.

“I know he (Joe Biden) wants to put in place a process that allows for discussions on priorities and levels of spending, but these negotiations should not be conducted with a gun to the head of the American people,” Janet said. Yelen.

“We shouldn’t get to the point of questioning whether or not the president can issue debt,” she said. “It would be a constitutional crisis.” The Head of State’s economic advisers believe that if the world’s leading power ceased to honor its financial deadlines for the long term, it could lose more than 8 million jobs this summer and see its gross domestic product plunge by 6%. .