US McConnell Responds to CBO Default Warning: "No Federal Government Default Expected"

Democratic and Republican Senate Floor Leaders "Engaged in Productive Discussions"

Chuck Schumer, U.S. Senate Majority Leader of the Democratic Party (left), and Mitch McConnell, Senate Minority Leader of the Republican Party
[Photo by AFP Yonhap News]

[Asia Economy Reporter Park Byung-hee] The Senate Majority Leaders of both the Democratic and Republican parties in the United States announced on the 30th of last month (local time) that they are continuing productive discussions to raise the federal government debt ceiling. This statement was made in response to the Congressional Budget Office (CBO) warning of the risk of a U.S. federal government default as the Treasury’s cash is expected to be depleted by the end of this month.

Republican Senate Majority Leader Mitch McConnell expressed his determination to reach an agreement with the Democrats in some form, stating, "The federal government will not default."

Democratic Senate Majority Leader Chuck Schumer said, "What we need is an agreement that does not jeopardize the federal government’s trust and credit." Schumer emphasized, "The risk is by no means greater than before," and "The goal we are striving to achieve is a plan that both parties can support."

Both leaders agreed that useful discussions are taking place. They also commented on the CBO’s warning issued earlier this month about the risk of a federal government default after mid-month.

The CBO stated that according to the 'Infrastructure Investment and Jobs Act' signed by President Joe Biden on the 15th of last month, the Treasury must disburse $118 billion for the Highway Trust Fund by the 15th of this month, and that Treasury funds could be exhausted before the end of the year. The CBO warned that if the debt ceiling is not adjusted and the Treasury cannot raise additional funds, the Treasury’s funds could be rapidly depleted after the $118 billion disbursement on the 15th.

U.S. Treasury Secretary Janet Yellen also urged Congress to quickly resolve the federal government debt ceiling issue, warning that otherwise the current economic recovery momentum could be completely lost.

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