Is The US Going To Run Out Of Money?
Is The US Going To Run Out Of Money?
Tom Rees Wed, September 29, 2021,
The US government is just 19 days away from running out of money and careering into a historic default on its debt - considered one of the world’s safest assets.
US Treasury Secretary Janet Yellen revealed on Tuesday that, come October 18, she will exhaust her budgetary tricks keeping the lights on, as Congress is deadlocked by another impasse over raising the debt limit.
Washington has, yet again, been hit by a debt ceiling standoff that runs the risk of a default on Treasuries, or US government debt, once Yellen blasts through her extraordinary measures that are currently staving off a crisis.
The fiscal brinkmanship between the opposing Democrats and Republicans threatens to result in a government shutdown this week and later a debt default that would send shockwaves through global financial markets.
What Is The Debt Ceiling?
The debt ceiling is the total limit on how much the US government is allowed to borrow for its funding needs.
America has been running large budget deficits in recent years and borrowed heavily during the pandemic, meaning that its debt pile has been expanding.
The current ceiling is $28.5 trillion. Meanwhile, the Biden administration is attempting to force through even greater spending measures including a $3.5 trillion package. Congress must sign off on a deal to suspend or raise the debt ceiling to stop the government running out of money.
What Happens If Deadlines Are Missed?
If lawmakers do not reach an agreement by the end of Thursday, a government shutdown will be triggered on Friday. Essential government services would continue, such as national security, but many would close and hundreds of thousands of federal workers would be furloughed.
A failure by Congress and Yellen to find a solution before October 18 would cause the US government to default, meaning it cannot pay to service its debts. It would, therefore, run out of money.
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