The United States will reach its debt ceiling authorized by Congress on Thursday

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The United States will reach its debt ceiling authorized by Congress on Thursday

U.S. Treasury Secretary Janet Yellen has warned that “extraordinary measures” may be needed.

Washington may need to take “extraordinary measures” as early as next week to avoid a default by the United States, Treasury Secretary Janet Yellen warned on Friday, sharply increasing the tension on this controversial subject between Republicans and Democrats.

In a letter addressed to the new Republican Speaker of the House of Representatives, Kevin McCarthy, the Secretary of the Treasury stressed that her department is preparing to put in place the first measures this month which will concern several pension funds for public service employees.

The measures, however, could only be temporary, warns Ms. Yellen: in the absence of a new ceiling, the United States could find itself in default, a first in the country's history.

“Failure to meet state obligations would cause irreparable damage to the economy America and the livelihoods of all Americans as well as global finance.

— Excerpt from letter from Janet Yellen, United States Treasury Secretary

But the Republican majority in the House of Representatives could play the clock on the subject to try to force the Democrats to reverse certain expenditures voted before its installation.

Spending is out of control, there's been no oversight and it can't go on like this, McCarthy told reporters on Thursday.

“We need to change the way we spend money recklessly in this country and we're going to make sure that's what happens. »

— Kevin McCarthy, Republican Speaker of the House of Representatives

Kevin McCarthy became the Speaker of the United States House of Representatives in January 2023.

On the Democratic side, elected Pennsylvania member Brendan Boyle, a member of the House Budget Committee, found Ms. Yellen's announcement extremely concerning, accusing Republicans of considering it normal to hold our hostage economy to impose extremist and unpopular reforms.

The White House has called on Congress to raise the country's debt ceiling, already warning that it has no intention of negotiating with the majority Republican to get a vote on the subject.

Executive spokeswoman Karine Jean-Pierre reminded the press that usually elected Republicans and Democrats are cooperating on the subject and that is what is needed, adding that the debt issue should not be politicized.

Republicans in the House are literally telling the country they are ready to cause the most egregious self-inflicted meltdown in modern history if they can't cut into spending on the programs most popular with voters, said his deputy, Andrew Bates. health insurance, especially for pensioners, as well as food aid for the poorest.

While lawmakers have raised or suspended the cap 78 times since 1960, mostly without difficulty, the 79th time, in December 2021, sparked deep tensions between the two parties.

The Republicans, then in the minority, had judged that raising the ceiling would amount to giving a blank check to the American president, accusing him of contributing to galloping inflation.

For Democrats, raising the limit was only for the purpose of repaying borrowed money, including trillions spent under the Trump presidency.

Congress had finally agreed, at the extreme limit, at midnight on the same day the previous ceiling was reached, to raise it to 31,381 billion dollars.

In her letter Friday, Janet Yellen points out that raising or suspending the ceiling does not mean authorizing new spending, but simply authorizing the government to fund the legal obligations that Congress and presidents of both parties have contracted in the past.

In a sign of the nervousness that the idea of ​​a potential American default arouses in the markets, the rates of loans Short-term U.S. government bonds jumped after the Mail was released.

The yield on one-month Treasuries rose to 4.43%, its all-time high for over 15 years (September 2007). It had already climbed a lot in recent months due to the monetary tightening of the American central bank (Fed).

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