[Asia Economy New York=Special Correspondent Joselgina] As the U.S. federal government has begun implementing special measures to avoid default due to the national debt ceiling, calls to raise the debt limit are mounting.
On the 20th (local time), Janet Yellen, U.S. Treasury Secretary, warned that failure to raise the federal government's debt ceiling could lead to default, which could soon trigger a global financial crisis.
While touring three African countries, Secretary Yellen appeared on CNN and said, "The possibility of a U.S. default could cause a global financial crisis," adding, "This would certainly undermine the role of the dollar as the world's reserve currency used in all transactions worldwide." In such a case, many people are expected to lose their jobs and loan costs will increase, making the repercussions inevitable.
After the U.S. debt reached the statutory limit the previous day, the Treasury Department announced it would begin implementing special measures. The U.S. statutory debt ceiling is $31.381 trillion, and if the total debt reaches this limit without Congress raising it or granting a suspension, it could lead to default. The special measures have bought the government time until June 5. However, Secretary Yellen urged Congress to promptly raise the debt ceiling, saying there is "considerable uncertainty" about how long these special measures can last.
In the past, the U.S. government raised the debt ceiling 22 times between 1997 and 2022. Among these, in 2011, congressional deadlock peaked, leading to a downgrade of the U.S. credit rating and turmoil in financial markets.
President Joe Biden also raised his voice on the same day, warning that failure to properly address the national debt ceiling would be a calamity. He announced that he would address the debt issue and the 2024 fiscal year budget in his upcoming State of the Union address scheduled for the 7th of next month.
Additionally, President Biden said, "I will have some discussions with the new House majority leader about it (the debt ceiling issue)," indicating his intention to talk with House Speaker Kevin McCarthy. However, he did not specify when such a meeting would take place.
While the Biden administration is demanding Congress raise the debt ceiling, the Republican Party, which holds the House majority, is making large-scale government spending cuts a precondition for raising the debt limit. Earlier, House Speaker McCarthy, who proposed a meeting with President Biden, immediately posted on Twitter, saying, "I accept the invitation to discuss responsible debt ceiling increases to address irresponsible government spending."
However, the prospects for negotiations are not entirely bright. The Biden administration has drawn a line, stating there will be no negotiations or concessions to the Republicans regarding the debt ceiling increase. Secretary Yellen dismissed the issue, saying, "Raising the debt ceiling is not about seeking the government's right to engage in additional spending but simply about the spending bills already approved by Congress. Therefore, this is not a matter for negotiation or bargaining."
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