WASHINGTON — A failure by Congress to raise the U.S. debt ceiling could set off a “manufactured” crisis that will hamper economic progress, Deputy Treasury Secretary Wally Adiemo said Friday.
Adiemo, who is meeting global financial leaders in Washington during the International Monetary Fund’s (IMF) Spring Meetings this week, said the continued delay in raising the $31.4 trillion debt ceiling is an international threat to the U.S. economy. He said it was a threat to trust.
A senior Treasury official told CNBC’s “Squawk on the Street” on Friday, “It’s important that Congress lift the debt limit. The last thing we need is the It’s a crisis.”
Adiemo said postponing legislation to avoid a default would “lose the confidence the world shows in America” and “would slow the momentum the United States had.”
Economist Adewale “Wally” Adeyemo answers questions during a nomination hearing for the Senate Finance Committee to become Deputy Treasury Secretary at the Dirksen Senate Office Building in Washington, D.C., Feb. 23, 2021.
Greg Nash | Poole | Poole | Reuters
The Congressional Budget Office warned The government could default on its debt between July and September. The US reached its borrowing limit earlier this year, forcing the Treasury Department to take so-called extraordinary measures to continue paying bills.First debt default in US history can cause economic damage In the world.
Republicans have sought spending concessions in exchange for raising the debt ceiling. The White House has so far refused to honor the request. lead to deadlockRepublicans, led by House Speaker Kevin McCarthy, are preparing to offer next week a plan to suspend the debt ceiling for a year in exchange for cuts to certain spending programs and regulatory changes. reported by Bloomberg.
The Republican proposal, due to be voted on by Congress in May, calls for keeping non-defence discretionary spending at about the same level as in fiscal 2022, sustaining 1% annual growth over the decade, according to Bloomberg. Other measures include a “clawback” of unused pandemic relief funds and a work requirement for healthy Medicaid recipients with no dependents under the age of 60, the outlet reported.
The proposal is unlikely to gain support from Democrats and become law.
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