US President Biden and Republican congressional leaders, McCarthy, are aiming to reach an agreement by Sunday to raise the federal government’s debt ceiling, which currently stands at $31.4 trillion.
The Treasury has limited funds available, and without an increase in the debt limit, federal cash could be depleted by June 1st, resulting in a government debt default. The consequences would include a government shutdown, a significant stock market crash, and a slowdown in economic growth. Prompt action is necessary to avert these potential risks.
US President Biden and Republican congressional leaders, McCarthy, stated on Wednesday (17th) that their goal is to reach an agreement by Sunday (21st) to raise the federal government’s $31.4 trillion debt ceiling.
Treasury Secretary Janet Yellen has stated that if no consensus is reached, the United States could face its first-ever debt default since the Great Depression by as early as June 1st.
This could ultimately lead to a collapse of the Treasury, a surge in interest rates, a sharp decline in the value of the US dollar, and a global economic crisis resulting in widespread unemployment.
The US Department of the Treasury announced on the 12th that as of May 10th, the US government had only $88 billion in extraordinary measures funds and approximately $143 billion in cash on hand.
If Congress does not raise the debt limit of $31.4 trillion, regardless of whether the Treasury has a prioritization plan for debt repayment, federal cash could be depleted as early as June 1st, leading to a government debt default.
This would not only result in a government shutdown but also cause a nearly 20% stock market crash and a 4% slowdown in economic growth.
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