The US is approaching a major economic catastrophe amid a slowdown in its economy as President Joe Biden’s administration failed to reach a breakthrough in its discussion with the leaders of the House of Representatives and the Senate regarding the raising of US debt ceiling limits.
American lawmakers must decide by June 1st to pass legislation to either increase or suspend the debt ceiling. The failure to raise the debt ceiling will result in the US government failing to meet its expenditures and pave the way to a major disaster in the crisis-ridden country.
The US debt ceiling is the maximum amount the federal government can borrow to run its expenses, including payment of salaries to federal employees, the US military, social security payments, etc. The White House needs endorsement from the US House of Representatives and the Senate to raise the debt ceiling.
The current cap of the debt ceiling is US$31.4 trillion, which was breached in January 2023. The treasury used its “extraordinary measures” then to provide the crisis-ridden Biden government with cash. However, now Biden needs the endorsement of the legislators to raise the ceiling.
For Biden, the major challenge comes from the Republicans who oppose his Democrat administration’s spending spree. The Republicans have been demanding a cut in government expenses, which Biden’s administration has been reluctant to accept.
Janet Yellen, the secretary of the treasury, has reportedly warned of dire consequences in case the US House of Representatives and the Senate leaders won’t agree to allow the government to raise the US debt ceiling limits.
Western news agency Reuters reported that Yellen has been calling the CEOs of major American corporations personally and informing them about the dangerous consequences of the government’s failure to raise the US debt ceiling limits. She reportedly told the ABC News programme ‘This Week’ that the US will head to a “constitutional crisis” if it fails to raise the ceiling.
Biden’s failure to reach a consensus with the leaders of both houses to raise the US debt ceiling limits won’t merely turn Washington bankrupt and render its staff and departments without money, but the entire American financial system will suffer, as more than $500bn US debts get traded daily.
Moody’s Analytics estimated that a prolonged breach in the US debt ceiling limit will result in a global financial crisis. There will be a 4% fall in the real GDP and more than seven million people will lose their jobs. It will shoot up the US unemployment to 8% and wipe off $10 trillion in household wealth as stock prices will fall by almost 20%.
One of the major crises that the Biden regime will face due to the failure in raising the US debt ceiling is in funding Ukraine’s war against Russia. Washington DC has been funding the battered regime of Volodymyr Zelenskyy. The US’s bankruptcy will also severely intensify the European economic crisis, which is in a precarious situation right now due to Russia’s special military operation in Ukraine.
