US Could Default On Debt As Early As June 1st

The US might default on June 1 if Republicans and Democrats don't agree to raise the debt ceiling according to Treasury Secretary Janet Yellen. The current debt ceiling is set at 31 trillion dollars. If an agreement is not reached, the Treasury would have to limit its spending. Republican House Speaker Kevin McCarthy is adamant about not raising the debt ceiling without cutting federal spending.

Could the United States prioritize certain expenses "as early as June 1" due to disagreement over raising the debt ceiling? This is what US Treasury Secretary Janet Yellen told Republican House leader Kevin McCarthy in a letter that was made public.

The US is stuck in a deadlock over raising the debt ceiling. A default on payments is looming.

She wrote to the Republican leader that they won't be able to meet the government's obligations by early June, likely June 1st.

Don't panic. This doesn't mean a default next month. The US has avoided shutting down services before but now they're in a more precarious economic situation. The Treasury would need to limit spending, like healthcare or retirement benefits, to make sure they can meet their debt obligations in the future.

Janet Yellen said it's impossible to know the exact date when the Treasury won't be able to pay the government's bills. Yellen will keep Congress updated as more information becomes available.

The Congressional Budget Office (CBO) agreed with the Treasury's predictions. They said that because there were fewer income tax returns filed than expected, there is a higher risk that the Treasury will run out of money in early June.

Republicans Seek Federal Spending Cuts

The US Congress has to vote to increase the federal debt ceiling regularly. They've done it 78 times without much debate. But this year, Republicans in the House, who have a slight majority, are refusing to give the Biden administration a blank check.

Spain is committed to reducing its public deficit below 3% by 2024. This is to manage its debt better. Spain believes that reducing debt is important to maintain stability in the economy. It wants to ensure that its finances are under control and not causing harm. Spain also believes that reducing debt will benefit the citizens who will have access to better public services and a stronger economy.

Republicans want to cut federal spending if the borrowing limit increases. The House voted to cut $4.5 trillion in federal spending over ten years in exchange for a $1.5 trillion borrowing limit increase or a review in March 2024.

Kevin McCarthy's victory in the House was not guaranteed due to his limited majority. This puts pressure on Joe Biden, who has just launched his 2024 reelection campaign. After three months of inaction from the Biden administration, the House has acted and now the Senate needs to do the same to end the risk of default. McCarthy stated that the Senate and the president need to get to work quickly.

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Joe Biden: Ceiling Must Be Raised Unconditionally

Joe Biden said multiple times that the debt ceiling must be raised without conditions. He believes that the debt is due to past policies of administrations from both parties. On Monday, he invited Kevin McCarthy to a meeting on May 9th with key Democrat and Republican Congressional leaders.

The White House spokesperson, Karine Jean-Pierre, said that the text won't become a law. The President made it clear. He won't burden the middle class and workers with tax cuts for the wealthy. The President will never do that.

The Senate, controlled by Democrats with a slight majority, should not pass it.

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"Payment Default Could Cause Market Collapse"

Chuck Schumer and Hakeem Jeffries, two Democratic leaders, said in a joint statement on Monday that it's time to put aside partisan interests and do what's right for the American people. They want to avoid the first government default, which could cause the markets to crash, increase costs for families, and jeopardize their retirement savings.

Both parties need to come to an agreement quickly. The current parliamentary session only allows for 12 days of debates in the Capitol by June 1st.

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