Al Mayadeen English

  • Ar
  • Es
  • x
Al Mayadeen English

Slogan

  • News
    • Politics
    • Economy
    • Sports
    • Arts&Culture
    • Health
    • Miscellaneous
    • Technology
    • Environment
  • Articles
    • Opinion
    • Analysis
    • Blog
    • Features
  • Videos
    • NewsFeed
    • Video Features
    • Explainers
    • TV
    • Digital Series
  • Infographs
  • In Pictures
  • • LIVE
News
  • Politics
  • Economy
  • Sports
  • Arts&Culture
  • Health
  • Miscellaneous
  • Technology
  • Environment
Articles
  • Opinion
  • Analysis
  • Blog
  • Features
Videos
  • NewsFeed
  • Video Features
  • Explainers
  • TV
  • Digital Series
Infographs
In Pictures
  • Africa
  • Asia
  • Asia-Pacific
  • Europe
  • Latin America
  • MENA
  • Palestine
  • US & Canada
BREAKING
Palestinian platforms: Settlers storm Al-Aqsa Mosque complex under the protection of the occupation police
Palestinian platforms: The IOF detonated a booby-trapped robot east of the al-Zaytoun neighborhood, south of Gaza City
Syrian Defense: We call on all parties in Sweida to cooperate with security forces and exercise restraint
Al Mayadeen's correspondent: The Lebanese Army is continuing its investigations and will later announce any information that does not affect the confidentiality of the investigation
Al Mayadeen's correspondent: It has not yet been determined whether the detainees belong to ISIS or another organization
Al Mayadeen's correspondent: Around 10 people of different nationalities, including Lebanese nationals, were detained
Al Mayadeen's correspondent: The Lebanese army arrested a number of people in the Matn area of Mount Lebanon with possession it has not disclosed
Gaza Civil Defense spokesman: We have strong indications that there are martyrs, injuries, and trapped people in the Salah al-Din area
Gaza Civil Defense spokesman: Citizens should avoid Salah al-Din Street because anyone who approaches it is at risk of being directly targeted
Gaza Civil Defense spokesman: Reality is that there is a very limited retreat of the vehicles, with the occupation forces providing cover undeer fire up to Salah al-Din Street

US debt default would trigger 'economic catastrophe': Yellen

  • By Al Mayadeen English
  • Source: Agencies
  • 25 Apr 2023 23:48
  • 1 Shares
4 Min Read

The US Treasury Secretary warns Congress not to leave the decision on raising the debt ceiling until the last minute.

  • x
  • A US debt default would trigger 'economic catastrophe': Yellen
    US Treasury Secretary Janet Yellen during a US House Committee on Financial Services hearing on the Annual Report of the Financial Stability Oversight Council, on Capitol Hill in Washington, DC, May 12, 2022 (Reuters)

US Treasury Secretary Janet Yellen warned on Tuesday that a US default on its debt would set off an "economic and financial catastrophe," stressing that Congress must not wait until the last minute to make a decision on the matter.

Yellen added that the decision to raise the debt ceiling or suspend it should be "without conditions".

The fight over the debt ceiling has become an annual tradition in Congress between the ruling party (presently the Democratic Party with Janet Yellen being one of its office bearers) and the opposition (presently the Republicans most prominent among which is McCarthy the speaker of the house).

Her remarks come ahead of an anticipated vote this week, organized by McCarthy, on lifting the debt ceiling and reducing spending. The vote comes contrary to US President Joe Biden's calls to unconditionally increase borrowing.

Read more: McCarthy calls Biden 'irresponsible' for refusal to put state debt cap

Biden is advocating for a "clean" lifting of the US borrowing limit, claiming that the deficit spending has already been approved by Congress and is thus not subject to debate.

In January, after the US maxed out its borrowing limit at $31.46 trillion, the US Treasury announced launching "extraordinary measures" to prevent defaulting on debt. Yellen then decided that the Treasury would temporarily suspend payments that aren't urgent and divert the money for more pressing needs i.e. services needed to keep the government operating. 

The Congressional Budget Office (CBO) warned in February that the government could exhaust its funds by July - the final date to decide on the matter - leading to a default on American debt unless Congress raises the current debt ceiling.

Related News

Trump approves Patriot missiles to Ukraine, bills EU for costs

Russia slams US-Denmark military pact as threat to its security

Read more: US Fed Reserve official says monthly hikes may no longer be needed

"In my assessment –- and that of economists across the board –- a default on our debt would produce an economic and financial catastrophe," Yellen said on Tuesday.

Failing to see through the crucial decision could mean higher payments on car loans, mortgages, and credit card rates, while businesses could be hit with a credit crunch. The US government could fail to release social security payments, bondholders' dues, and military wages, which would directly impact millions of American citizens.

"This economic catastrophe is preventable," she said. 

"The solution is simple: Congress must vote to raise or suspend the debt limit. It should do so without conditions. And it should not wait until the last minute," she added.

In the long run, a default also means that the government's borrowing costs would increase permanently and future government projects would become much more expensive.

The plan proposed by Republican House Speaker Kevin McCarthy to raise the US debt ceiling in exchange for cuts in government spending was criticized on Monday by Moody's Analytics, who claim the plan would slow growth and cut employment.

The agency argued that if the draft presented by McCarthy on April 17 was passed as is, it would lead to a drop of 0.6 percentage points in US potential growth in 2024 and the elimination of 780,000 jobs.

Addressing other issues on Tuesday, Yellen said the Biden administration's top economic priority is to tackle inflation while safeguarding gains of the last two years.

In comparison to a scenario in which a new ceiling was approved without conditions, unemployment would reach 4.6 percent in March 2024, up from 3.5 percent in March 2023.

  • United States
  • debt ceiling
  • US
  • Kevin McCarthy
  • Janet Yellen
  • Joe Biden

Most Read

Hezbollah SG reveals war details on Al Mayadeen for the first time

Hezbollah SG reveals war details on Al Mayadeen for the first time

  • Politics
  • 8 Jul 2025
Major ambush in Gaza kills 6 Israeli troops, injures dozens

Major ambush in Gaza kills 5 Israeli troops, injures 14

  • Politics
  • 8 Jul 2025
Israeli soldiers are seen in Beit Hanoun ahead of an operation by the al-Qassam Brigades, undated (Al-Qassam Brigades Military Media)

'Israel' on blast as media exposes report discrepancies in Gaza ambush

  • Palestine
  • 8 Jul 2025
Yemen Navy sinks ETERNITY C ship, shares footage of operation

Yemen Navy sinks ETERNITY C ship, shares footage of operation

  • Politics
  • 9 Jul 2025

Coverage

All
The Ummah's Martyrs

Read Next

All
The Freedom Flotilla ship Handala as it departs for Gaza, where it aims to break the maritime blockade at a port in Syracuse, Sicily in southern Italy on July 13, 2025. (AFP)
Palestine

Freedom Flotilla's Handala departs Sicily in bid to break Gaza siege

The container ship CMA CGM Laperouse, left, docks at the Georgia Ports Authority's Port of Savannah, Sept. 29, 2021, in Savannah, Ga (AP)
Politics

US shipbuilding woes deepen as tariffs, outdated policies backfire

Gaza war raises ethical questions for ex-Obama, Biden officials
Politics

Mercenary firm tied to Gaza war crimes hires Obama-Biden PR operatives

'Israel' targets children in Gaza collecting water
Palestine

'Israel' strikes Gaza kids fetching water, blames it on 'malfunction'

Al Mayadeen English

Al Mayadeen is an Arab Independent Media Satellite Channel.

All Rights Reserved

  • x
  • Privacy Policy
  • About Us
  • Contact Us
  • Authors
Android
iOS