ill higher interest rates affect american finances

Some House Republican members have gone so far as to suggest that default would be acceptable and some conservative thought leaders argue that default would be desirable. House Speaker McCarthy and other leaders of the House Republican majority have threatened the nation with default in order to push for a wide range of radical policies. The House Republican leadership has threatened to hold the debt ceiling hostage As a result, the government will have to delay making payments for some activities, default on its debt obligations, or both. … f the debt limit is not raised or suspended before the extraordinary measures are exhausted, the government will ultimately be unable to pay its obligations fully. On the same day as Yellen’s announcement, the Congressional Budget Office released a statement noting that the projected x-date remained uncertain but that: At that point, absent congressional action to raise, suspend, or eliminate the debt ceiling, the nation would default on its legal obligations. On May 1, Treasury Secretary Yellen informed House Speaker Kevin McCarthy (R-CA) that the federal government could reach the x-date as early as June 1. A number of factors affect the x-date and make accurate projections challenging, including the fact that the Internal Revenue Service has extended the 2022 tax filing deadline to October for a number of states-most notably California-due to weather related disasters. While estimates of the x-date are always subject to some degree of uncertainty, this year’s x-date has been subject to greater uncertainty. These consequences and the harm they would cause for Americans and the nation are not inevitable and can and should be averted by swift congressional action to raise, suspend, or eliminate the debt limit.Ī number of factors affect the so-called “x-date,” the date when the Treasury Department will exhaust the various cash and debt management options available to stay under the debt limit. Potential economic consequences of default include: recession and a sharp rise in unemployment chaos in financial markets and lasting damage to U.S. Experts across the political spectrum agree that the consequences of default-or even a near brush with default-would be severe for the U.S. The Treasury Department is currently deploying “extraordinary measures” to manage cash flow and keep borrowing within the limit to avert default. On January 19, Treasury Secretary Janet Yellen informed Congress that the federal government had hit the debt ceiling-a statutory limit on its ability to borrow to finance the ongoing obligations of governing. Recent announcements that the nation could face default as early as June 1 have heightened concerns over the impact of default-or even a close brush with default-might have on the economy.

Ill higher interest rates affect american finances