The United States reaches its debt ceiling as a partisan standoff exacerbates economic concerns. On Thursday (January 19), the US government exceeded its borrowing limit of US$31.4 trillion. This occurred amid a disagreement over raising the ceiling between the Democrats of President Joe Biden and the Republican-controlled House of Representatives, which could result in a fiscal crisis in the coming months.
Congressional leaders, including House Speaker Kevin McCarthy, were informed by Treasury Secretary Janet Yellen that her department had begun using extraordinary cash management measures that could prevent default until June 5.
With a newly gained majority in the House, Republicans want to use the time until the Treasury’s emergency maneuvers run out to force Biden and the Democratic-led Senate to cut spending.
A prolonged standoff, according to corporate leaders and at least one credit rating agency, could shake markets and shake an already unstable global economy.
Due to the difficulty of forecasting payments and government revenues months in advance, Yellen warned that the June date was subject to “considerable uncertainty.”
In a letter on Thursday, Yellen wrote to congressional leaders, “I respectfully urge Congress to act promptly to protect the full faith and credit of the United States.”
However, neither Republicans nor Biden’s Democrats appeared to be willing to compromise.