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Last Updated: January 19, 2023, 09:03 IST
Washington, United States
The US might default on its debt obligations if the debt ceiling is just not raised by the US House of Representatives, which the Republicans now management (Image: Reuters)
Earlier, US Treasury Secretary Janet Yellen warned that the US will hit $31.Four trillion borrowing restrict on Thursday, probably pushing the US right into a default
The White House on Wednesday mentioned that President Joe Biden won’t negotiate with Republican hardline conservatives over their “dangerous and harmful” opposition to expanding the US debt limit.
“There will not be any negotiations over the debt ceiling. We will not do that. It is their constitutional duty,” Press Secretary Karine Jean-Pierre instructed reporters. “It shouldn’t be used as a political soccer.”
The world’s biggest economy is on the brink of severe disruption with Republicans threatening to refuse the usual annual rubber stamping of an increase in the legal borrowing limit, potentially pushing the United States into default.
Treasury Secretary Janet Yellen says that the government will effectively hit its $31.4 trillion borrowing limit on Thursday, at which point she will use accounting manoeuvres to stave off default temporarily.
Even with these measures, the federal government will once more discover itself on the fringe of a fiscal cliff in just a few months, seemingly round June, consultants say.
A default would likely trigger panic on the financial markets with contagion far through the global economy, just as the United States is attempting to ease through a difficult post-Covid economic period without falling into recession.
Far-right Republicans who now hold key power in the party’s narrow majority in the House are demanding that Biden agree to slash government spending. They argue that radical cuts are needed to reduce borrowing, which for years Congress has agreed to increase each year — raising the so-called debt ceiling.
The White House says that cuts of the size demanded by Republicans would have to come out of untouchable social security and military spending programs, or involve major new taxes. Democrats also argue that the current debt is to pay for a budget already agreed to by Congress and therefore not up for renegotiation.
“Think about how Congress has… dealt with the debt ceiling for the past several decades. It is their responsibility, their constitutional responsibility to act,” Jean-Pierre mentioned.
“There is a cause that treasury secretaries of each events, if you consider it, if you happen to all keep in mind, rejected this unbelievable, dangerous and harmful concept that has by no means been tried earlier than,” she said of the Republican threat.
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(This story has not been edited by News18 employees and is revealed from a syndicated information company feed)
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