U.S. President Joe Biden called on the U.S. Congress to raise the national debt ceiling. According to him, a possible default would threaten the dollar’s status as the world’s reserve currency.
“If we don’t raise the national debt ceiling, it will call into question Congress’s willingness to fulfill our obligations that we have already undertaken,” Biden said, clarifying that he was referring to payment of past debt, not to new obligations.
The American leader warned that in case of no action on this issue the dollar status as the world’s reserve currency will be shaken, the U.S. credit rating will go down and the interest on the national debt will significantly grow.
The president called the policy of the Republicans, who so far refuse to vote for raising the debt ceiling, irresponsible. According to him, their behavior threatens the whole process with a parliamentary obstruction. In this regard, Biden called on the Republican Party to “get out of the way” and not block the decision, adding that “such games are like ‘Russian roulette.
At the same time, the president said that he could not give a guarantee that there would not be a default on U.S. debt obligations. He stressed that the solution to this problem will directly depend on the actions of the Republicans in Congress.
“I cannot believe that the consequences will be so grim that the ultimate outcome will be just that. But can I guarantee that there won’t be a default? If I could, I would, but I can’t,” Biden said when asked if a situation was possible in which America could not pay its debts if Congress did not suspend the national debt limit.
In addition, the president of the United States warned that Congress’ refusal to raise the national debt ceiling could hurt the dollar’s status as the world’s reserve currency.
“It would undermine the security of U.S. Treasury securities and threaten the dollar’s reserve status as the world’s currency on which the world relies. The U.S. credit rating would be lowered, interest rates would go up for mortgages, auto loans, credit cards and any loans at all,” Biden explained.
Earlier, on September 29, it was reported that the U.S. House of Representatives supported the initiative to suspend the national debt limit until December 16 next year. At the time, 219 lawmakers voted for the proposal, while 212 voted against it. It was noted that now the project will have to be considered by the Senate of Congress.
September 28 the U.S. Treasury Department warned about the risk of default in the country in case of failure to increase or freeze the national debt limit. According to the head of department, Janet Yellen, if this does not happen, in October, the U.S. Treasury reserves will be exhausted, the economy will enter into recession and the United States as a nation will weaken. The Minister also pointed out that the announcement of default by Washington will critically affect the entire global economy.
In this case, back in July Yellen sent a letter to Congress, which reported that if the debt ceiling will not be raised until July 31 or the borrowing limit will not be suspended, the country will default.
It is known that in the United States on August 1, restrictions on the size of the national debt came into force again. They have not been in force for two years. At that time the country’s debt already exceeded its GDP, and in June this year it reached $28.5 trillion. The limit was restored at $22 trillion.