The threat of default in the US
In January, the United States exceeded the $31.4 trillion ceiling on public debt, which forced the Treasury to use emergency measures to continue financial operations. US President Joe Biden has repeatedly demanded an expansion of debt limits without conditions. Republicans, who control the lower house of Congress, attribute the increase in the ceiling to the adoption of a program of radical budget cuts, which the White House does not agree with.
If lawmakers don’t agree to raise the ceiling soon, and the government exhausts its borrowing capacity by early June, it threatens to halt payments that millions of Americans rely on. According to Moody’s Analytics experts, the macroeconomic consequences of a default could be catastrophic for stock exchanges and economies of different countries, and draw analogies with the 2006 crisis. Analysts believe that under such a scenario, the United States GDP will decrease by 4%, about 6 million people may lose their jobs. But experts consider such a negative scenario unlikely.
Nevertheless, US Treasury Secretary Janet Yellen warned that the deadline for raising the debt ceiling is the first half of June.
US President Joe Biden during a press conference at the G7 summit in Hiroshima said that the default could be “provoked” by the Republicans. At the same time, the owner of the White House is studying the possibilities in order to avoid default on debt obligations.
