The US debt ceiling deadline has been extended to June 5, but Treasury Secretary Janet Yellen has warned that a default is still a possibility if Congress does not raise the debt ceiling by then.
The debt ceiling is the maximum amount of money the federal government can borrow. The current debt ceiling is $31.4 trillion, and the government is expected to reach that limit by June 5. If the debt ceiling is not raised, the government will not be able to pay its bills, which would lead to a default.
A default would have a devastating impact on the US economy. It would lead to a recession, job losses, and a decline in the value of the dollar. It could also lead to a financial crisis.
House Speaker Kevin McCarthy and his Republican debt negotiators are working to reach a deal with President Joe Biden to raise the debt ceiling. The two sides are close to an agreement, but there are still some sticking points.
One of the sticking points is the amount of time the debt ceiling would be raised. Republicans want to raise the debt ceiling for a short period of time, such as one year. Democrats want to raise the debt ceiling for a longer period of time, such as two years.
Another sticking point is spending cuts. Republicans want to impose spending cuts in exchange for raising the debt ceiling. Democrats are opposed to spending cuts.
It is not clear if a deal will be reached by the June 5 deadline. If a deal is not reached, the government will default on its debt obligations.
The debt ceiling is a self-imposed limit on the amount of money the federal government can borrow. The limit was first enacted in 1917, and it has been raised or suspended 87 times since then.
The debt ceiling is a political issue, and it is often used by one party to try to gain leverage over the other party. Republicans have used the debt ceiling as a bargaining chip in the past, and they are likely to do so again this time.
The Biden administration has said that it will not negotiate with Republicans on the debt ceiling. The administration has said that the debt ceiling is a matter of national security, and that it is not up for negotiation.
The stakes are high in the debt ceiling negotiations. A default would have a devastating impact on the US economy, and it could lead to a recession. The Biden administration is hoping to avoid a default, but it is not clear if a deal will be reached by the June 5 deadline.
Here are some of the potential consequences of a US default:
A recession: A default would likely lead to a recession, as businesses and consumers would lose confidence in the government's ability to pay its debts. This would lead to a decrease in investment and spending, which would slow economic growth.
Job losses: A recession would lead to job losses, as businesses would be forced to cut costs. The Congressional Budget Office estimates that a default could lead to the loss of up to 3 million jobs.
A decline in the value of the dollar: A default would likely lead to a decline in the value of the dollar, as investors would lose confidence in the US economy. This would make it more expensive for Americans to buy imported goods and services, and it would make it harder for US businesses to compete in the global marketplace.
A financial crisis: A default could lead to a financial crisis, as banks and other financial institutions would be forced to take losses on their investments. This could lead to a decrease in lending, which would further slow economic growth.
The Biden administration is urging Congress to raise the debt ceiling without delay. The administration has said that a default would be a "self-inflicted wound" that would hurt the American people.
Congressional leaders are working to reach a deal, but it is not clear if a deal will be reached by the June 5 deadline. If a deal is not reached, the government will default on its debt obligations, which would have a devastating impact on the US economy.