US government could incur defaults as of December 21: study center

Por Jason Lange

WASHINGTON, Dec 3 (Reuters) – The U.S. government could begin defaulting on its bills as early as Dec. 21 if Congress fails to raise a statutory limit on public borrowing, the Bipartisan Policy Center said on Friday.

The think tank’s projection, based on up-to-date official data on tax revenue and government spending, underscores mounting pressure on President Joe Biden’s Democratic Party to find a way to raise the $ 28.9 trillion debt limit. and avoid the economic calamity that late payments could bring.

Congress on Thursday passed legislation to fund the government until mid-February, avoiding the risk of a partial government shutdown this week. However, legislators must still address the fact that they have authorized more loans and expenses than their debt limit allows.

“Congress would be flirting with financial disaster if it goes into the holiday recess without addressing the debt limit,” said Shai Akabas, director of economic policy for the Washington-based Bipartisan Policy Center.

If upcoming tax revenues are favorable, the center projected, the debt ceiling could become binding until January 28.

On Tuesday, the Congressional Budget Office, a nonpartisan body, said the Treasury Department could begin defaulting on payments at the end of the month, while Treasury Secretary Janet Yellen said Washington could likely continue to pay. all your bills until at least December 15th.

Once the Treasury Department reaches its borrowing limit, you will only have incoming tax receipts to pay your bills. And because it borrows nearly 40 cents for every dollar it spends, the Treasury would begin to default on its payments owed to lenders, citizens, or both.

The shockwaves would spread through world financial markets. Cuts in domestic spending would push the US economy into a recession as the government would pay nothing, from Social Security benefits for the elderly to wages for soldiers.

Biden’s Democrats have a minimal majority in both houses of Congress, but Republicans have vowed not to cooperate on the debt ceiling, which could hamper attempts to raise borrowing limits under normal legislative rules.

Democrats could increase the limit without Republican votes, under a slower legislative process known as “reconciliation.”

(Edited in Spanish by Carlos Serrano)

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