US National Debt Ceiling Nears Limit... Yellen Urges Congressional Action

US Government Debt to Reach Statutory Limit on July 1 at $23.4 Trillion
Reference to 2011 US Credit Rating Downgrade Case...Republicans and Democrats Engage in 'Tug of War'

Yellen, U.S. Treasury Secretary, Responding at Senate Appropriations Subcommittee Hearing

(Washington Reuters=Yonhap News) Janet Yellen, U.S. Treasury Secretary, appeared on the 23rd (local time) at the Senate Appropriations Subcommittee hearing on the budget for the next fiscal year and responded to lawmakers' questions. At the hearing, Secretary Yellen stated that inflation is expected to slow to around 2% by the end of this year or early next year.
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[Asia Economy Reporter Lee Jun-hyung] Janet Yellen, U.S. Treasury Secretary, warned on the 23rd (local time) that the national debt has reached its limit and requested Congress to raise and suspend the debt ceiling.

According to the New York Times (NYT) and others, Secretary Yellen announced in a letter sent to the leadership of the House and Senate that she would take emergency measures next week to prevent the unprecedented possibility of a government default. Yellen expressed concern that if a default occurs, it could cause irreparable damage to the U.S. economy and the livelihoods of all Americans.

This concern arose as the U.S. government debt faces the statutory limit starting July 1. During Donald Trump's presidency in 2019, the White House and Congress agreed to suspend the application of the debt ceiling until July 31 of this year. After this date, the statutory limit will apply to the debt, restricting the federal government's ability to borrow money from the public and private sectors. The current debt size is approximately $23.4 trillion.

Secretary Yellen also referred to the case in 2011 when the credit rating agency Standard & Poor's (S&P) downgraded the U.S. credit rating. At that time, the Republican and Democratic parties dramatically agreed to suspend the debt ceiling, but S&P gave the U.S. an unprecedented stigma due to the default crisis.

The Republican and Democratic parties are again engaged in a standoff. Senate Minority Leader Mitch McConnell warned that all Republican senators would vote against raising the debt ceiling in opposition to President Joe Biden's proposed tax increases on the wealthy. Meanwhile, the ruling Democratic Party has not yet formulated a strategy on how to handle the difficult negotiations, according to the Associated Press (AP).

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