It’s a debate currently rocking America, but it’s more troubling. Without a deal to raise the U.S. debt ceiling, the world’s largest economy fails, the communications director warned, “with very serious consequences not only for the United States, but for the global economy.” Julie Kozak of the International Monetary Fund during a telephone press conference. In the aftermath, Julie Kozak cited “higher interest rates, broader instability and economic consequences.”
Democrats and Republicans are at loggerheads over raising the U.S. debt ceiling, a necessary legislative maneuver so the world’s largest economy can borrow and pay its bills, officials and creditors. Without an agreement, the US will find itself in an unprecedented situation of defaulting on payments from June 1.
Donald Trump’s dangerous grain of salt
Former Republican President Donald Trump, the Republican candidate for the 2024 election, urged Republican elected officials on Wednesday to “establish a default” unless Democrats agree to “massive cuts.” However, he felt that default would be avoided, predicting that Democrats would “give in” on the matter.
But Joe Biden’s Secretary of the Economy and Finance and US Treasury Secretary Janet Yellen sounded the alarm at the time. Flirting with default, she felt, would only “lead to significant economic costs” by pushing the negotiations to their limits.
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