Washington – (AFP)
US Treasury Secretary Janet Yellen on Sunday appealed to Congress to raise the debt ceiling to avoid a “historic financial crisis.”
In an article in the Wall Street Journal, Yellen noted that the United States had always raised the debt ceiling before it was exceeded. “The United States has never defaulted. Not once,” she said.
And she continued, “Doing so (defaulting) would likely lead to a historic financial crisis.” “A default could lead to higher interest rates, a sharp decline in stock prices, and other financial turmoil,” she said.
The debt ceiling, which only Congress can increase, was reinstated on August 1, after being suspended for two years.
The current debt ceiling, unless it is raised, prohibits the United States from borrowing more than the current ceiling of $28.4 trillion. The issue usually raises differences between the Republican and Democratic parties. The debt ceiling has already been raised 80 times since the 1960s.
And the Treasury warned last week that the government will run out of money in October. In her last article, Yellen enumerated a list of potential financial disasters that could inflict on the country if the debt ceiling was not raised and the United States was unable to repay its debts within the specified deadlines.
“Within days, millions of Americans will be short of cash,” she said.
And she continued, “Social security checks may be cut off for about 50 million elderly people. Soldiers’ salaries may stop.” And she added, “We will emerge from this crisis as a weaker nation temporarily.”
Yellen recalled the 2011 debt crisis, noting that the policy of putting the United States on the brink of the debt ceiling “has pushed America to the brink of crisis.”
During the crisis related to the debt debate under former President Barack Obama, the United States was closer than ever to default.
This prompted Standard & Poor’s to downgrade the US debt rating to “AAA”, causing a shock in the markets. Yellen stressed that acting as quickly as possible would enable the country to avoid the worst outcomes of 2011. “Time means money in this case, billions of dollars,” she wrote. She stressed, “Neither postponement nor default can be tolerated.”
“The last 17 months have tested the economic strength of our country. We are just emerging from the crisis. We must not completely immerse ourselves again in another avoidable (crisis).”
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