Time is running out on American finances, according to Scott Bessent. The secretary of the Treasury sent, Friday, May 9, a letter to the president of the House of Representatives, the Republican Mike Johnson, expressly inviting elected officials to vote a text on the debt ceiling before the parliamentary holidays – which begin on July 24 – in order to prevent the United States government from being short of liquidity.
“I press, respectfully, the congress to raise or suspend the limit of the debt by mid-July (…) To preserve credibility and confidence [de la communauté internationale et des investisseurs] towards the United States “urges Scott to be in his letter.
The fiscal financial year of the American federal government extends every year from the 1er October to 30 September. But the world’s leading economy reached the threshold in January beyond which it is, in principle, forbidden to borrow to finance itself. The treasure then took “Extraordinary measures”temporary, to freeze expenses and allow the government to honor its existing deadlines. “There is a reasonable probability that liquidity and extraordinary measures be exhausted in August”warns the secretary of the Treasury.
The Republican elected officials, majority in the two chambers of the congress, have not yet managed to agree on the technical methods of a suspension or a recovery of the debt ceiling. At the end of March, the Congress Budget Service (CBO) had already warned that the United States risked being in default in payment in “August or September 2025” lack of parliamentary agreement.
A risk to catastrophic consequences
The world’s leading economy has never experienced a defect in payment, an event that would have catastrophic consequences for the United States. Long treated as a non-partisan subject, the debt ceiling became a political instrument in the mid-1990s and was at the origin of dead ends which put the United States on the verge of the cessation of payments more than once.
“Past episodes have shown that waiting for the last minute to suspend or raise the debt limit could have serious negative consequences for the financial markets, businesses and the federal government”wrote Scott Bessent.
After one of these crises, during the summer of 2011, the standard financial assessment agency and Poor’s had decided to lower the United States note, deprived of the prestigious AAA.
“Inability” possible to vote a text by August to August “Would sow chaos in our financial system and weaken the security and standing of the United States”insisted the minister.