According to the new forecast, US default is imminent at the beginning of June

With the debt ceiling unchanged, there is a significant risk that the government will be unable to meet all of its commitments sometime in the first two weeks of June, the Congressional Budget Office said on Friday. If the debt ceiling is not raised or suspended before Treasury reserves are exhausted, the government will have to delay payments on some activities, default on its debt obligations, or both.

However, should the so-called extraordinary measures by the Treasury Ministry be sufficient to finance government business until June 15, the expected new tax revenues could provide some leeway. Then there is a threat of default until the end of July. Most recently, Minister of Finance Janet Yellen warned that such a failure is possible as early as June 1st.

In the United States, Congress sets a debt ceiling at irregular intervals and determines how much money the state can borrow. In the meantime, the applicable debt ceiling has been reached in the USA and the US Treasury Department has to tap into the reserves – because the USA is no longer allowed to take on any more debt to pay its bills.

In order to raise the debt limit, US President Joe Biden’s Democrats need the Republicans in Congress. However, they are opposed and demand cuts from Biden, for example in the social sector. A first high-level meeting of congressional party leaders in the White House ended on Tuesday without a result. Another meeting scheduled for Friday has been postponed to next week. A default by the largest economy would have devastating consequences for the US and the global economy.

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WASHINGTON (dpa-AFX)

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