The United States on the brink of financial collapse? Faced with the debt ceiling being reached, the US Treasury is forced to take emergency measures to avoid the worst. But how long will these actions be enough? The economic future of the country depends on it…
The US economy finds itself under pressure as the latest data shows that the public debt ceiling, set at just over $36 trillion, has been reached. Faced with this worrying situation, Janet Yellen, the outgoing Secretary of State for the Treasury, announced the imminent implementation of “extraordinary measures” starting January 21, 2023, the day after the inauguration of President-elect Donald Trump.
A ceiling that no longer authorizes new spending
In a letter to key congressional officials, Yellen stressed that the current debt ceiling “does not authorize new spending.” This limit, which reflects the total amount the federal government is authorized to borrow to meet its financial obligations, is a recurring topic of political debate in the United States.
In order to avoid a potentially catastrophic default for the economy, the Ministry of Finance is forced to resort to emergency measures. These mainly concern the temporary cessation of payments to several retirement funds and health or disability benefits for public employees.
Technical adjustments to meet deadlines
According to details provided by the Treasury, these technical adjustments “are not immediately necessary for the payment of pensions”. Ms. Yellen wanted to reassure by affirming that “retirees and public service employees will not be affected by these actions”.
The objective of these extraordinary measures is to avoid any delay in the payment of invoices, which would penalize state suppliers and more generally the American economy. However, they can only be temporary, until Congress reaches an agreement to raise or suspend the debt ceiling.
-The specter of payment default looms
If negotiations in Congress fail, the United States could ultimately find itself in default, a scenario with potentially disastrous consequences for the global economy. Since 1960, the debt ceiling has changed 78 times, including 49 times under a Republican president and 29 times under a Democratic president, highlighting the recurring nature of this problem.
An official report published the same day as Janet Yellen’s announcement anticipates that public debt will represent 118% of US GDP in 2035, compared to 100% in 2025. These alarming projections highlight the urgency of finding solutions sustainable ways to control the country’s debt.
Donald Trump’s promises tested by reality
In this tense context, the campaign promises of Donald Trump, who is due to take office on January 20, will be closely scrutinized. The president-elect reiterated his desire to continue reducing taxes while slashing federal government spending. He assures that the tax revenues from the additional customs duties that he wants to put in place will make it possible to rebalance the accounts.
Scott Bessent, Donald Trump’s choice for Treasury Secretary, was reassuring during his hearing before senators: “The United States will not default on its debt if I am confirmed.” It remains to be seen whether these words will be enough to allay the concerns of the country’s markets and economic partners.
Managing the American debt promises to be one of the major challenges of the new administration. Between economic imperatives and political games, the coming months will be decisive for the financial future of the world’s leading power. The eyes of the entire world will be glued to Washington, awaiting an outcome that could have repercussions far beyond America’s borders.
Related News :