The US faces insolvency if Congress doesn’t raise the debt limit by June 1

The US government may not be able to repay all its debts from early June if Congress does not raise the debt limit, Finance Minister Janet Yellen warned on Monday. She warned that this would have huge negative consequences for the state.

In a letter to Congress, Yellen said that the government could exceed the limit set for the last time in 2021 “potentially on June 1”. She added that it was impossible to predict the exact date. She added that if Congress fails to raise the limit in time, the state’s bankruptcy will have dire consequences, putting Americans in “serious hardship, damaging our position of global leadership and calling into question our ability to defend national security interests.”

Already in January, Yellen announced that the US had reached the agreed limit, but the Treasury Department then decided to take “extraordinary measures” to allow the government to continue paying off debts for several more months. Most economists had expected the cut-off date to come in August, but that estimate has changed due to weaker-than-expected tax revenues.

Despite warnings from Yellen and economists about the potentially catastrophic consequences of a U.S. bankruptcy, the White House and Republicans who control the House of Representatives are deadlocked to raise the debt ceiling, currently at $31.4 trillion.

Last week, the House of Representatives narrowly passed a bill that would increase the cap but include sharp cuts in social spending. The bill has no chance of passing through the Democratic-controlled Senate in this form, and Joe Biden himself announced his veto. House Republican Speaker Kevin McCarthy said the bill was an attempt to open negotiations.

But the White House maintains that Congress has a duty to “cleanly” raise the limit – as did, among others, during the presidency of Donald Trump – and does not intend to enter into negotiations.

Biden called McCarthy on Monday to invite him to a meeting at the White House to discuss the matter with Republican and Democratic leaders in both houses of Congress.

From Washington Oskar Górzyński (PAP)

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