Janet Yellen: Democrats should alone be responsible for raising nation's debt limit


The issue of the US debt limit has been a hot topic in the media for several months. Finally, on October 18th, Congress approved raising the national debt limit by $492 billion, which allowed the country to escape a technical default. It has been estimated that these funds will be enough for the government to pay their bills through December 3rd. This means that already in a month, the US could already be on the verge of a default. For that reason, in just 2 weeks after the debt ceiling has been raised, the issue is again being discussed in the highest political and economic circles. Technically, there is nothing to talk about because the problem remains the same as it was a month ago. Democrats could raise the national debt limit alone although it should be a bipartisan agreement. At least, this is what Democrats want - to make the two parties responsible, and not just their own. At the same time, the decision should be approved by at least 60 Senators. Senate Democrats have only 50 votes. Consequently, they should either win Republicans' votes, which is highly unlikely, or change the filibuster rule, which will grant them an opportunity to pass any bill by a simple majority in both chambers. So far, the second option seems to be more possible.

Yesterday, US Treasury Secretary Janet Yellen called on Democrats to be prepared to raise the national debt limit without the help of Republicans and bypass the standard voting procedure in Congress. According to Yellen, that would be better than a default. "Should it be done on a bipartisan basis? Absolutely. Now, if they're not going to cooperate, I don't want to play chicken and end up not raising the debt ceiling. I think that's the worst possible outcome. If Democrats have to do it by themselves, that's better than defaulting on the debt to teach the Republicans a lesson," the Treasury Secretary said. Yellen also proposed including section 304 in the budget legislation, which would allow Democrats to make a decision to increase the national debt limit without any intervention from Republicans. Moreover, the budget resolution has already been adopted, which means that section 304 can be used. Indeed, this paragraph has never been used since 1974, when the corresponding law was adopted. Democrats and President Joe Biden are in a rather difficult position. Biden's approval rating has been steadily falling and is already at its lowest levels. If social and infrastructure packages are not approved, and the country remains in limbo on the edge of the abyss, this will only further reduce Democrats' popularity.

The material has been provided by InstaForex Company - www.instaforex.com

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