WASHINGTON, DC - APRIL 26: U.S. Speaker of the House Rep. Kevin McCarthy (R-CA) speaks to the media at the US Capitol on April 26, 2023 in Washington, DC. The US House voted and passed a bill raising the nation's debt ceiling.
Less than a month from now, millions of Americans' jobs, benefits, and financial security might begin to disappear as the Republican House uses a debt dispute to attempt to impose large expenditure cutbacks on President Joe Biden.
Imminent US Default
Earlier this week, Treasury Secretary Janet Yellen issued a dire warning that unless Congress increases the nation's borrowing capacity, the US government might run out of money to fulfill its commitments as early as June 1. A national and global financial disaster might result from failing to do so.
Experts have warned of a disaster on the size of the 2008 financial collapse, with veterans and older people losing pensions, as well as military financing and essential government programs halted.
For weeks, the possibility of a default this summer had only been a theoretical danger. Nevertheless, with Yellen's letter to House Speaker Kevin McCarthy, that possibility became a real-time nightmare with a flashing deadline. This gives McCarthy and Biden a brief window to find a solution to preserve the economy.
Congressional leaders are invited to the White House by Biden for crisis talks the following week.
After a time of optimism that Congress would pull back at the last minute, Yellen's letter may go some way toward raising anxiety on Wall Street about the situation.
Republican attempts to reduce what they regard as wasteful government spending and efforts to curb the increase of the national debt, which has risen to more than $31 trillion, are perfectly legitimate uses of the authority they have gained via a democratic election. However, they must decide if it is ethical to threaten a fiscal catastrophe in order to further a political agenda.
According to CNN, the hovering debt crisis is the most pressing test of Washington's ability to heal the country's political rifts during this time of divided governance. The most frightening fact is that if the US goes through this crisis, it will be a self-inflicted mishap that will destroy America's financial stability and worldwide leadership.
Why the Debt Limit Must Be Increased
The government's income is less than its expenditures; hence the debt limit must be increased. Because of its impeccable credit history, it reportedly enjoys low-interest rates when borrowing money.
CNN reported that since Congress must pay for spending it has already approved, Democrats argue that the debt ceiling must be raised. They also point out that Republicans did this with ease while Donald Trump was president.
As the disaster approaches, the scariest thing is that each side seems to think that the fear of the unthinkable will finally make the other side back down so that they do not get blamed. There is currently no proof that either can or will occur.
