US government tears debt limit – Yellen initiates emergency measures

Janet Yellen

The US Treasury Secretary suspended payments to state pension funds.

(Photo: AP)

Washington In the USA the government hit the federal debt limit of $31.4 trillion on Thursday. Minister of Finance Janet Yellen immediately initiated emergency measures to avoid insolvency and the leeway of the President’s government Joe Biden to obtain. She announced that payments to state pension funds would be suspended. Service recipients are not affected.

According to her, the makeshift can probably continue to govern until June 5th. However, there are “considerable uncertainties” as to whether this date can be kept. She again called for the debt limit to be raised: “I urge Congress to act immediately to protect full confidence in the US and its creditworthiness.”

The US has a statutory limit on how much new debt the government can incur to pay for its spending. The limit is raised at relatively regular intervals, but this has to be approved by Congress.

If the upper limit is not increased, the state cannot borrow any more money, cannot meet its obligations and cannot settle its old debts that are due. There is a so-called government shutdown, which means, among other things, that certain authorities can be closed.

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After the congressional elections last year, the opposition republican After gaining a majority in the House of Representatives, it will be more difficult for Yellen and Biden to get the chamber’s approval for raising the debt limit. In particular, the four dozen or so Conservative members of the House Freedom Caucus have threatened to block an increase in the debt limit unless it involves significant spending cuts.

the republican are calling for a ranking of savings for concessions and have brought in social services and healthcare, for example. So far, neither Democrats nor Republicans are willing to back down.

“Taxpayers money recklessly spent”

Karine Jean-Pierre, Biden’s spokeswoman, warned: “It is important that Congress recognizes that it is constitutionally responsible for maintaining the debt ceiling.”

Republican Andy Biggs previously said the debt ceiling should not be raised. “The Democrats have recklessly spent our taxpayers’ money and debased our currency,” the far-right wrote on Twitter.

The newly elected Republican Speaker of the House of Representatives, Kevin McCarthy, had also made it clear that he only wanted to raise the debt ceiling under certain conditions – for example in return for savings in the social sector.

“If you gave your kid a credit card and they kept going over the limit, you wouldn’t just keep increasing it,” he explained. Republicans regained control of the House of Representatives in November’s midterm elections.

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A default by the world’s largest economy could trigger a global financial crisis and economic downturn. In 2011, a newly elected Republican majority in Congress delayed raising the debt ceiling. As a result, the US credit rating was downgraded for the only time in history. Another consequence were years of cuts in budget and military spending.

In the United States, Congress sets a debt ceiling at irregular intervals and determines how much money the state can borrow. The limit has been increased dozens of times since it was introduced in 1917, otherwise the money would have run out.

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