The United States Treasury Department forecasts that the United States could drift into insolvency as early as June, unless Congress approves raising the debt ceiling.
Anni Huttunen,
Yrjö Kokkonen
The US government is in a tight spot. The divided Congress should be able to agree on raising the country’s debt ceiling, or an unprecedented situation may lie ahead: the insolvency of the world’s leading economic power.
The United States government debt ceiling is the statutory limit on government indebtedness. The currently valid ceiling of more than 31,000 billion dollars (nearly 29,000 billion euros) was met in January, but the president Joe Biden the administration has so far insisted on different, the British newspaper Guardian as “unusual” invited (you switch to another service) with the help of arrangements.
However, on Monday, the US Department of the Treasury published its chilling forecast, according to which the government may drift into insolvency as early as the beginning of June, unless the debt ceiling can be raised. About that report (you switch to another service) for example, the US online magazine Politico.
Although the debt ceiling has been raised no fewer than 78 times in the history of the United States, this time’s decision is problematic. The problem is also familiar in Finland: the parties disagree on how much debt the state should have.
Republicans agree to accept a law to raise the debt ceiling, if large spending cuts are agreed on in the same legislative package. Their wishes include, for example, waiving student loan forgiveness and reducing subsidies for green energy. The ideas of cutting are difficult for the Democrats.
Every year in the United States, the government spends more money than the tax revenue it collects would allow.
The government covers the budget deficit by taking on debt.
The debt is financed with government bonds, which are issued by the Ministry of Finance.
When the United States government reaches its debt ceiling, the department can no longer issue bonds, the proceeds of which are a very important source of revenue for the government.
US Treasury Secretary Janet Yellen has called on leaders from both parties in Congress to negotiate on raising the national debt ceiling, because the stakes are high.
The US has never been in a situation where it couldn’t pay its bills and, for example, the Washington Post rate (you switch to another service)that the situation would, if prolonged, have serious effects on the economy of the United States as well as the entire world.
The government would not be able to pay its bills and the effects would be felt in social benefits, tax refunds and the payment of government employees’ salaries. Critical functions such as the defense forces and the police still receive funding.
If the conflict continues for a long time, stock market prices are predicted to collapse. At worst, the economy would sink into recession and there would be widespread unemployment.