The call came after Treasury Secretary Janet Yellen warned that the United States was at risk of defaulting on its debts by next June.
Observers who spoke to “Sky News Arabia” warned of an escalation of the US debt crisis, which will reach historic levels next June, coinciding with high inflation and slow economic growth. growth, prompting Congress and the government to approve an emergency plan to avert an “economic disaster”.
Earth-shattering speech to Congress
Elaine sent a shocking speech to Congress on Monday in which she called for preparations for the possibility of the US government defaulting on its debts, starting next June. Yellen acknowledged that the date is subject to change and could come weeks later than expected, given the difficulty of forecasting government cash flows. But based on April tax receipts and current spending levels, I expected the government to run out of cash by June 1. “Given current projections, it is imperative that Congress act as soon as possible to raise or suspend the debt ceiling in a way that provides long-term certainty that the government will continue to make its payments,” Yellen wrote. in a letter to the House. representatives.
Yellen announced last January that the country had reached the maximum debt limit ($31.381 billion) and had begun taking “extraordinary measures” such as postponing pension investments to preserve cash. .
Bad economic policies
According to US political analyst Mac Sharkawy, poor economic policies by President Joe Biden’s administration have caused an exacerbation of the economic crisis in the country.
For months, serious criticism has been directed at the President of Congress, accusing him of aggravating the economic crisis and of not providing quick solutions. The Ukrainian war came immediately after the Corona pandemic and led to an increase in inflation rates, which reached great limits in 2020 and then doubled, coinciding with the crisis in Ukraine. Biden is expected to be talking with senior congressional officials about quick fixes to the crisis or he will face the worst case scenario of defaulting on his debt.
Possible scenarios
For his part, the American political scientist Deacon Hyatt puts forward several expected scenarios for the current crisis, in particular:
Agreement between Democrats and Republicans on an agreement to raise the debt ceiling. A last minute deal is made, the crisis is over and everything is back to normal. The continuation of the crisis and the government’s delay in paying its obligations, setting the stage for a partisan confrontation that could turn into an economic or constitutional crisis, or both. Among the possibilities, President Joe Biden could decide to defy Congress and order the Treasury Department to ignore the debt limit, taking a potentially high-stakes case to the Supreme Court. In the worst-case scenario, the government will stop paying its many obligations on time, dealing a blow to an economy already sliding into recession.
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