US Treasury Secretary Janet Yellen has warned Congress about the threat of default and the accompanying “irreparable damage” to the country’s economy
Yellen reminded that the debt ceiling is currently frozen until July 31, so in the absence of any action, the level of debt will reach its statutory maximum on August 1.
“If the Congress does not act by Monday, August 2, 2021 to freeze or raise the debt ceiling, the Treasury will have to initiate certain additional emergency measures to prevent the USA from defaulting on its obligations”, – she said.
According to her, a default could cause “irreparable damage to the US economy and the economic situation of all Americans”. The head of the US Treasury recalled that even one threat of default in the past has already caused huge damage to the US economy when Washington’s credit rating was downgraded in 2011.
“For this reason, no President or Treasury Secretary from either party has ever allowed even the thought of a US default on any of its obligations”, – she stressed.
For her part, White House press secretary Jen Psaki urged “not to worry too much” about the threat of default because “Treasury secretaries sent some 50 letters to Capitol Hill on the subject of the debt ceiling, and some of them were very similar in content in terms of the language used”.
Recall that the debt problems of the United States arose due to the financial-economic crisis of 2007-2008. Washington has repeatedly had to raise the ceiling of the national debt, which caused heated political battles between Democrats and Republicans.