US Debt ceiling ‘must be raised’ ahead of default: Treasury Secretary
The US exceeded the debt ceiling established by Congress, prompting the Treasury Department to begin using extraordinary steps to keep the government from ceasing to pay its bills.
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Treasury Secretary Janet Yellen listens to opening remarks before testifying before the Senate Finance Committee about the President's proposed budget request for the fiscal year 2024, Thursday, March 16, 2023, on Capitol Hill in Washington (AP)
Treasury Secretary Janet Yellen on Thursday rejected Republican calls for negotiations, saying that the United States must increase its debt limit before breaching its financial obligations. “The debt ceiling simply must be raised,” Yellen said during a US Senate Finance Committee hearing.
“To put at risk the full faith and credit of the United States and to threaten to cause an economic and financial catastrophe isn’t an acceptable requirement.”
Republicans' refusal to raise the debt limit in the absence of financial responsibility concessions from the Biden administration is not an appropriate condition, according to Yellen.
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She added that President Joe Biden is prepared to negotiate with Republicans on other economic policy matters, but not on the debt ceiling.
Through the summer or early fall of 2023, the Treasury Department has taken emergency measures to pay the country's debts; after that point, the nation runs the risk of defaulting.
Data from the Treasury Department show that the total national debt of the United States is $31.46 trillion.
US banking system ‘sound’ following Silicon Valley bank collapse
Despite Silicon Valley Bank and other financial institutions failing recently, the US banking system is still "sound," according to Yellen.
She told the US Senate Finance Committee that "I can reassure the members of the committee that our banking system is sound and that Americans can feel confident that their deposits will be there when they need them."
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After Silicon Valley Bank, Silvergate Bank, and Signature Bank collapsed, Moody's Investors Service revised its outlook for the US financial system from stable to negative on Tuesday.
Following the collapses, the Biden administration claimed it took steps through the Treasury Department and other organizations to safeguard deposits and reassure Americans.
On March 10, the Federal Deposit Insurance Corporation (FDIC) shuttered #SiliconValley Bank (SVB) and seized its deposits in the second-largest bank collapse in US history! pic.twitter.com/KRJYkaSXCx
— Al Mayadeen English (@MayadeenEnglish) March 15, 2023
Last month, the Congressional Budget Office (CBO) said the US Treasury could exhaust its funds by July leading to a default on American debt unless Congress raises the current $31.4 trillion debt ceiling.
The head of CBO, Phillip Swagel, warned in February that if IRS tax revenues fall short of its estimates, then “the extraordinary measures could be exhausted sooner, and Treasury could run out of funds before July.”
The IRS is scheduled to receive the report on tax revenues in April.
The budget office now projects that the annual federal budget deficit over the next 10 years will reach $18.8 trillion despite its earlier estimates released last May that the figure would be 20% lower at $15.7 trillion.
