The US could face a debt default as soon as June 1st, according to Treasury Secretary Janet Yellen. This warning comes amid a political dispute over raising the borrowing limit and Republicans pushing for spending cuts. In January, the United States reached its borrowing limit of $31.4 trillion, but the Treasury has been taking extraordinary measures to continue financing the government's activities.
However, if the debt ceiling is not raised or suspended by Congress before the Treasury's current tools are exhausted, the US government risks defaulting on payment obligations, which could have significant implications for the economy. The Treasury Secretary has called for urgent action from Congress to raise or suspend the debt limit to provide longer-term certainty that the government can continue to meet its financial obligations.
Last week, US Republicans voted to raise the national borrowing limit with drastic cuts as they sought a showdown with President Joe Biden over "excessive" spending. With the government's inability to meet its obligations, the US may face a serious economic crisis, which could have ripple effects worldwide. The urgency of the situation requires immediate action from policymakers to prevent a potential disaster that could have severe consequences for the global economy.
