House Republicans and Joe Biden are still stuck in their contentious budget discussions. Each side accuses the other of putting the country on the path to economic disaster. House Republicans have presented a budget and pledged that they would only vote to increase the debt ceiling if spending cuts were made. Biden, however, has been unwavering and has refused to negotiate.
The country will literally run out of funds if they do not reach an agreement.
Janet Yellen, Treasury Secretary, appeared on “This Week,” with George Stephanopolous Sunday. She warned of the financial disaster that could occur if America defaulted. When asked how soon this could happen, she replied as early as next month.
We project that cash will run out in early June. There is a possibility that it could happen as soon as the 1st of June.
There is still a great deal of uncertainty, and I will update Congress with new information as it becomes available. That’s our current thinking.
Treasury Sec. Janet Yellen: “Our current projection is that in early June a day will come when we are unable to pay our bills unless Congress raises the debt ceiling.” pic.twitter.com/Z8b3iKnzHy
— The Post Millennial (@TPostMillennial) May 7, 2023
Stephanopolous asked her if she had any other extraordinary measures that she could take.
For several months, we have taken extraordinary measures. Our ability to do this is running out. We will run out of cash, and according to our projections, we won’t be able to pay our bills until early June. It’s something that I urge Congress to do.
It’s perfectly acceptable to negotiate about the budget and about priorities in spending. President Biden presented a detailed, 10-year budget that cuts deficits by 3 trillion dollars while investing in the strength and stability of the American economy. We do have to raise the debt limit to prevent economic catastrophe.
Many people are curious about the consequences of a U.S. default. Yellen:
Treasury is in a position where it’s unable to pay the entire bill that was due on that particular day. This would be the first time ever in American history that we have failed to pay our dues. We would not be able to pay all our obligations, including payments to Social Security or Medicare recipients, or interest on debt. It’s generally agreed that economic and financial chaos would result.
In 2011, there was a sharp decline in the stock markets and borrowing costs. The U.S. credit rating agencies downgraded the U.S. in 2011. The cost of borrowing for Americans to buy a house, or a car or raise the debt ceiling will be permanently increased.
It’s really a nightmare. This budget showdown is ominous. Biden, who has been on a spending spree since he became president, seems unwilling to discuss lowering the spending. Yellen claimed that “these negotiations should not be held with a gun to the heads of the American people.” But the question is: who is holding the metaphorical gun?
Biden appears to be stubborn and inflexible. He will have to move unless he wants to push our economy even further off the cliff.