U.S. Treasury Secretary Janet Yellen shared serious news with congressional leaders on Tuesday. Apparently, the U.S. government is on the verge of running out of money by mid-October. To avoid this financial catastrophe, Democrats are hoping Republicans will vote to raise or defer the national debt limit. However, this option seems impossible.
“… We know from previous debt limitations that waiting until the last minute can do serious damage to business and consumer confidence, increase orrowing costs for taxpayers and negatively affect U.S. credit ratings over the next few years,” a letter said.
What is the national limit?
According to Forbes, the limit of forn acts as a credit to the government. It determines how much orvar the government can take to pay its bills. Forbes has compared the increase to a credit card without raising the comparison limit. Bills that the government has included include: “providing social security, salaries for military and federal employees, and tax refunds,” and interest on older bills. Without increments or suspensions, missed and delayed payments are possible. It can also affect the capital market.
“We were seeing indefinite delays in critical payments,” Janet wrote in an op-ed in the Wall Street Journal last week. “About 50 million seniors could stop taking Social Security checks for a while. Soldiers can go without pay. Millions of families dependent on monthly child tax credit may see delays.
What is the working deadline?
In Tuesday’s letter, Janet said in detail that the US government would end “its extraordinary arrangements” by October 18. He further warned that this date is just a guess. This means that the date can be “moved forward or backward indefinitely” if the government has unexpected or low spending.
“It is uncertain whether we will be able to fulfill the promises of all nations after this date,” Janet wrote.
His warning came hours after Senate Republicans blocked a bill that would have stalled the bill. The Stopgap Bill has solved two current financial problems: government funding and debt limits.
CNN reported that the government fund was due to expire in September-September, but the bill sought to extend the date to December-December.
What are the leaders doing about it?
Although it passed the House, Republicans shut it down in a 48-50 vote on Monday. Senate Majority Leader Chuck Schumer initially voted yes, but changed his vote to no. No other Republicans voted in favor of the measure. Biden blames the administration for most of the current situation, but Janet denies the allegations in an article in her Wall Street Journal article.
“Even if the Biden administration did not approve any spending, we still need to fix the debt limit.”
If the United States defaults on its debt, Americans are hurting the stock market, raising interest rates, and hurting the economy.
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