The U.S. government risks a high chance of defaulting on its debt if the debt ceiling is not suspended or raised. The debt ceiling, which is the amount of money lawmakers authorize the Treasury Department to borrow, must be suspended or raised by October 18th.
Who is affected🤷: According to Treasury Secretary Janet Yellen, the U.S. likely will default on its debt if the debt ceiling is left unchanged. The House passed a bill to suspend the debt ceiling, but the bill is likely to be rejected by Republicans in the Senate, who argue that Democrats must deal with this debt as part of their “sprawling investment in social programs and climate policy”. The U.S. government borrows money by issuing treasury bonds so it can pay for obligations such as social security, medicare, tax refunds, & military salaries.
Why is this important🤔: Treasury Secretary Janet Yellen warned lawmakers of “catastrophic” consequences if they failed to suspend or raise the debt limit before the government hit it, which the Treasury estimated could come as soon as October 18th. Investors could become “extremely nervous”, which could lead to an “extreme kind of reaction in markets”.
