White House warns of ‘economic catastrophe’ without debt deal
- Democrats and Republicans head for showdown on US debt limit
- US government will run out of cash to pay its debts sometime in October
But Republicans have vowed to withhold support for raising the debt ceiling – forcing Democrats in the majority to bear the political costs alone.
US Treasury Secretary Janet Yellen has warned that without an increase the government will run out of cash to fund operations and pay its debts sometime in October.
“The US has never defaulted. Not once. Doing so would likely precipitate a historic financial crisis that would compound the damage of the continuing public health emergency,” she said in a column Monday in The Wall Street Journal.
The issue has frequently been a political football in politically-polarised Washington, with Republicans engaging in brinkmanship multiple times during the administration of Democrat Barack Obama.
But under Biden’s predecessor Donald Trump, Democrats supported Republican efforts to suspend the debt limit for two years.