Time is running out, debt ceiling must be raised in June, US Treasury Secretary says | Economy

The US Congress sets a debt ceiling at irregular intervals and determines how much money the government can borrow. That debt ceiling has so far stood at USD 31.4 trillion (about EUR 29 trillion). However, that limit was already reached in January. If the debt ceiling is not raised, the US government may not be able to meet all its financial obligations in a matter of weeks.

The Treasury Department has since taken “exceptional measures” to maintain spending without exceeding the cap. When the Treasury Department started using these accounting tools, Secretary Yellen indicated that it was highly uncertain how long they would last. On Monday, she said there may be no more cash as early as June 1. Economists previously thought the US could foot the bill until August.

Yellen therefore called on Congress on Monday to “take action as soon as possible”. If the debt ceiling is not raised, civil servants can no longer be paid and benefits can no longer be paid. The creditworthiness of the United States will also be at stake. Economists fear it could shake up financial markets.

US President Joe Biden has therefore agreed next week with Republican Speaker of the US House of Representatives Kevin McCarthy and other congressional leaders. The meeting, scheduled to take place on May 9, is “the first sign of progress” in debt ceiling negotiations, according to Bloomberg news agency.

American media report that the debt ceiling has been raised, extended or revised no fewer than 78 times since 1960. It has never happened in the country’s more than 200-year history that America could no longer meet its financial obligations, Biden emphasized Monday.

Republicans voted last week to raise the debt ceiling, but McCarthy countered with a slew of government spending cuts. Biden refused to agree to this, because the cuts would make some of his policy plans impossible.