McCarthy puts conditions
The newly elected Republican Speaker of the House of Representatives, Kevin McCarthy, also made it clear that it only wanted to raise the debt ceiling under certain conditions – for example, in exchange for savings in the social sector. “If you gave your kid a credit card and he kept going over the limit, you wouldn’t just top it up,” she explained. Republicans regained control of the House of Representatives in November’s midterm elections.
US Secretary of the Treasury Janet Yellen had warned last week of an imminent insolvency of the US government. If the debt ceiling is not raised or lifted, the current debt ceiling will already be reached this Thursday, she explained. Then the Ministry of Finance would have to take “extraordinary measures” to be able to continue to guarantee the solvency of the government. But even then, a default could only be postponed until early June. The debt limit so far is around 31.4 trillion US dollars (about 29 trillion euros).
The consequences of default
A default by the world’s largest economy could trigger a global financial crisis and economic slowdown. In 2011, a newly elected Republican majority in Congress delayed raising the debt limit. As a result, the US credit rating was downgraded for the only time in history.
In the United States, Congress sets a debt ceiling at irregular intervals and determines how much money the state can borrow. The limit has been increased dozens of times since it was introduced in 1917, otherwise the money would have run out.