This news article is based on the claim made by the national treasury secretary on the need to prevent an unprecedented non-payment on U.S. debt. In an interview on CNBC, Janet Yellen stated that the U.S. is in a position of falling into another economic recession if Congress fails to address the country’s debt ceiling issue. She sustained that it would be disastrous if Congress could not take action by October 18, 2021, which she termed to be the deadline during the interview (Franck). Senate Majority Leader Chuck Schumer has been striving to get the Senate to pass debt-limit laws again. Nevertheless, Republican opposition has been pressuring Democrats to consider using a particular reconciliation system so the assessment can pass without GOP financial backing.
Yellen stated that President Joe Biden had not yet decided whether to re-appoint Federal Reserve Chief Jerome Powell to the office when his present term ends in February of the following year (Franck). Moreover, President Joe Biden called upon Congress to increase the debt ceiling this coming week and prevent an impending unequivocal economic recession. The article also features tweets by Senator Pat Toomey, who maintained that he believed that Democrats were apprehensive concerning being associated with debt limit amount around or above $30 trillion.
Event’s Greater Significance
The debt limit is essential in determining the economy’s stability since it establishes the maximum amount of money the country can borrow using issuing bonds cumulatively. The U.S. reached its debt limit on August 1, 2021, and there is an established debt limit of $28.4 trillion, which may lead to the shutdown of the government (The White House). When the federal government’s ongoing transactions cannot be financially supported solely by federal spending, it must borrow money to pay its expenses. Once this occurs, the Treasury of the United States generates and sells bonds; Such bonds represent the federal government’s debt. Hence, this event is necessary to outline the economic effects of passing the Federal debt limit. The federal government would be unable to meet all of its requirements due to the lack of funds. It is also helpful in demonstrating the role of Congress in maintaining the country’s economic state and preventing economic recession.
Be Woke
The economic consequences of such an unprecedented situation would almost certainly be negative. Nonetheless, there are still numerous uncertainties concerning the speed and amplitude of the harm the U.S. economy may suffer. If the administration becomes unable to pay all its expenses for an extended time based on how long the event lasts, how it would be controlled, or how much investors change their opinions on the security of U.S. Treasury bonds. An extended stalemate is likely to have severe economic harm in the United States. Even in the best-case scenario, where the impasse is resolved quickly, the economy is expected to experience entirely preventable, primarily due to the challenges that COVID-19 poses to the country’s economy. This news article’s events did not surprise me; therefore, I am still interested in the topic.
Stay Woke
- Should citizens be worried if the debt ceiling is not lifted as suggested by the national treasury secretary, Janet Yellen?
- What will be the consequence of the U.S. defaulting on its debt?
Works Cited
Franck, Thomas. U.S. Faces a Recession if Congress Doesn’t Address the Debt Limit Within 2 Weeks, Yellen Says. CNBC, 2021, Web.
The White House. The Debt Ceiling: An Explainer. U.S. Government, 2021, Web.