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US government may be over cash To pay its bills in a matter of weeks if Congress fails to raise the federal debt limit, according to a new analysis by a Washington think tank.

forecast from bipartisan policy center Shows the “X date” — the day when Treasury Secretary Janet Yellen exits the maneuvering room to prevent the US from breaching debt limits — will occur sometime between December 21 and January 28.

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What is the loan limit?

“Those who believe that debt limits can be safely pushed behind December’s legislative stack are misinformed,” Shai Akbas, the center’s director of economic policy, said in a statement. “Congress would be flirting with financial disaster if it went out for a holiday break without addressing the debt ceiling.”

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The US has never defaulted on its debt before, although it came to a close in 2011 when House Republicans refused to pass a debt-limit hike, prompting rating agency Standard & Poor’s to lower the US debt rating a notch. inspired.

If the US fails to raise or suspend the debt limit, it will eventually have to temporarily default on some of its obligations, which could be severe and negative. Economic Meaning. Interest rates are likely to rise, and demand for treasuries will decline; Even the risk of default can drive up the cost of borrowing.

Once the US runs out of money, the Treasury will be unable to meet about 40% of all payments in the coming weeks, according to analysis.

Economic deadline before Congress before the end of the year

“How the Treasury would operate in such an environment is unclear,” it said. “Priority and delayed payment are two possibilities, but substantial uncertainty exists about their operation.”

The Treasury Department began implementing so-called extraordinary measures to keep the government running after raising the debt limit to about $22 trillion in August – about $6 trillion below the actual level – and extended the measures in October. Yellen told Congress that the federal government has enough cash to pay its bills until at least December 15, but said there are scenarios where the US may not be able to meet its obligations after that date. .

Failure to raise the loan limit could “ruin” the economy’s recovery from the pandemic, she said.

NS current credit limit is approximately $28.9 trillion.

The bipartisan Policy Center’s timeline factor in the $118 billion transfer to the Highway Trust Fund, which has been confirmed by the Treasury Department, will be completed by December 15. Quarterly corporate tax receipts are also due on that day. If they come out weaker than expected, it could leave the Treasury with “alarmingly low cash balances,” the think tank said.

“Failing to expand the country’s debt limit would be an unprecedented event in modern American history that poses serious risks to American taxpayers,” the analysis said. “Failure to pay a country’s bills on time could send an immediate ripple effect to the global economy, particularly at the time of economic recovery and heightening uncertainty over a new COVID-19 variant.”

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One option floating up Capitol Hill is adding a provision addressing debt limits in the final National Defense Authorization Act, which could be voted on as soon as possible. as of next week, But there has been some bipartisan pushback for the proposal: Both House Majority Leader Steny Hoyer and House Minority Leader Kevin McCarthy have warned that limiting the NDA’s debt ceiling could threaten its passage in the lower house.

“We’ve told the Senate that,” Hoyer, D-MD, said recently. “That’s the reality. These are the numbers.”