Janet Yellen calls on the US Congress to save the country from a technical default - Kakiforex.com - Financial Market Media No. 1 in the World Janet Yellen calls on the US Congress to save the country from a technical default Janet Yellen calls on the US Congress to save the country from a technical default
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August 10, 2021

Janet Yellen calls on the US Congress to save the country from a technical default

 US Treasury Secretary Janet Yellen has again appealed to the Congress to approve an increase in the national debt limit as soon as possible. At the moment, America's national debt is about $28.5 trillion, and this figure will continue to grow in any case, since the US budget is deficient by about $1 trillion every year. But in the last two years, the national debt has grown by 4-5 trillion at once, as a lot of money was spent on saving the economy from a complete collapse. In the United States, there is a law from 1924 that does not allow borrowing any amount. On the other hand, to raise the national debt limit, it is necessary that the US Congress approves this decision. Since 1924, which is almost 100 years ago, the limit has already been increased 74 times. That is, almost once a year. Therefore, we can assume that this time there will be no problems with this issue. It should be understood that the Congress has not yet voted to raise the limit simply because there is a fundamental confrontation between Democrats and Republicans on almost any issue. This feud began even under Donald Trump, after the end of the term of his presidency, the Republicans accepted the fact that the Democrats prevail in both chambers of the Congress. Thus, at every opportunity, the Republicans try to foil the plans of the Democrats. So, most likely, they will do it this time too. Republicans oppose the exorbitant social and infrastructure spending proposed by Joe Biden and his administration. They have already managed to reduce the size of the infrastructure package from $2.2 trillion to $1 trillion. Now, there will be a battle over the national debt limit. However, in any case, the Democrats have a "narrow" majority in the Senate, so they can make a decision without the help of Republicans. The only question is, do they want to make this decision solely on their own? Janet Yellen calls on both political forces to make this decision together to avoid bankruptcy of the country. At the same time, according to rumors, the Democrats are preparing for the introduction of a "social" package of $3.5 trillion. And, as already mentioned, this package can also be adopted exclusively by members of the Democratic Party. Thus, it is likely that the Democrats will continue to use their advantage in both chambers. Otherwise, why was it necessary to seek it? The US Treasury Secretary also states that an increase in the debt ceiling will not lead to an increase in spending, but will only allow the Treasury to fulfill its obligations under previously approved expenditures. Failure to fulfill these obligations can cause irreparable damage to the American reputation and economy.