In the United States, the national debt limit suspended by Congress in August 2019 has come back into force. If it is not raised or suspended again, there is a possibility of default, Bloomberg agency wrote on August 1.
Thus, in 2019, the federal debt ceiling was temporarily set at $22 trillion. As the agency specifies, the limit after a two-year freeze was restored at $22 trillion-plus the accumulated debt from August 2019. Thus, the limit is equal to $28.5 trillion.
To resolve the issue with the debt ceiling, Congress needs to suspend it again or raise the limit to a certain level. It is noted that if the measures are not taken, then by October the U.S. could be on the verge of default on normal spending obligations or allow the default on government bonds.
The U.S. Treasury Department has already suspended several special securities since July 30, and also began to use special debt instruments, which are not taken into account when calculating the debt limit.
At the same time, Treasury Secretary Janet Yellen in July in a letter to Congress has already warned that if the country’s public debt ceiling will not be raised or the borrowing limit will not be suspended, the country will default and “irreparable damage” to the economy.
Yellen also noted that default “would cause irreparable damage to the U.S. economy and the economic situation of all Americans. She also recalled that the threat of default in 2011 hurt the U.S. economy when the country’s credit rating was downgraded for the first time in history.
On July 1, the Congressional Budget Office (CBO) projected that the U.S. federal budget deficit in the fiscal year 2021, which began October 1, 2020, is expected to reach $3 trillion. It is noted that this amount is $130 billion less than in 2020, but three times more than in 2019.