Original title: US Treasury Secretary Ye London urges Congress to raise the government debt ceiling, otherwise there will be default risk Source: China News Service
China News Service, Washington, July 23 (Reporter Sha Hanting) US Treasury Secretary Yellen wrote to congressional leaders on the 23rd local time, asking Congress to take action to raise the federal government’s debt ceiling or suspend its effectiveness, otherwise the Treasury Department will take ” Unconventional measures” to prevent government debt defaults.
Yellen said in the letter that the Treasury Department will suspend the issuance of new bonds at midnight on July 30. If Congress cannot raise the government debt ceiling or suspend its effective before August 2, the Treasury Department will take “unconventional measures” to repay the debt to prevent the US government from defaulting on its debt.
Yellen also said that there is “great uncertainty” in the duration of the “unconventional measures” of the Treasury Department. There are inherent challenges in predicting the expenditure and revenue of the US government in the next few months, and the epidemic has increased the uncertainty.
Yellen emphasized that if there is a government debt default, it will bring “irreparable harm to the U.S. economy and people’s lives,” and even the risk of possible debt default will have a negative impact.
There has been no government debt default in the history of the United States, but in 2011, the Republicans in Congress refused to raise the debt ceiling and the sovereign credit rating of the United States was downgraded, causing financial market turmoil.
The U.S. Congressional Budget Office released a report on the 21st, predicting that the Treasury Department’s unconventional cash management measures may be exhausted in the first quarter of the new fiscal year beginning on October 1 this year, most likely in October or November, the U.S. government will face Debt default risk.
For Yellen’s warning, White House Press Secretary Psaki called it a “normal” step. She also said that Congress is expected to take measures to raise the debt ceiling or suspend its effective as soon as possible.
At present, the Republican leader of the Senate, McConnell, has stated that the Republican Party will not support raising the debt ceiling. US media believe that the Biden administration can only count on Democratic congressmen to support the passage of relevant legislation.
According to the cross-party budget bill that took effect in August 2019, Congress agreed to temporarily lift the debt ceiling and allow the Ministry of Finance to issue new debt until July 31, 2021. Starting from August 1 this year, the debt ceiling will be restored to take effect.
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