Janet Yellen has urged Congress to increase the debt ceiling.
US Treasury Secretary Janet Yellen has announced that the government is expected to run out of money by October 18 unless lawmakers raise the debt cap. The announcement was made during a meeting with the Senate Committee on Banking, Housing, and Urban Affairs.
“If the debt ceiling were not raised, I think there would be a financial crisis and a calamity.”
She added that the interest payments on the government debt would rise and expressed her concerns that the situation can undermine confidence in the dollar as the reserve currency.
Yellen has warned that the US could default on its debt, which, however, has never occurred, as Congress has voted 80 times to raise or suspend the debt limit since 1960.
The Secretary has also presented potential consequences in case the deadline is missed. She believes that around 50 mln Americans will be suspended from getting social security payments, including families with kids. Military forces may end up unpaid, millions of jobs to be cut, while interest rates are forecasted to rocket.
She has stressed that the debt limit must be raised in good time before the deadline to smooth the economic situation.
Yellen has refuted the Republicans’ arguments that increasing the limit will affect government spending. Earlier, the Republicans in Senate have not adopted the bill which would have suspended the debt limit.