On Monday, U.S. President Joe Biden condemned the Republicans' position as "reckless and dangerous" in the Congressional dispute over raising the debt ceiling, which could lead to the world's largest economy defaulting on its obligations. Biden criticized the "irresponsibility" of the Republicans, stating that their obstruction threatens to "push our economy into the abyss" as the October 18 deadline approaches to resolve the conflict.
Biden stated, "We are forced to raise the debt ceiling because of Trump's reckless policies; Republicans must clear the way and end the chaos." The United States may be just weeks away from defaulting on its debts for the first time ever. Although the debt ceiling of $28.4 trillion was reinstated on August 1, Treasury Secretary Janet Yellen has been working to keep the country's finances afloat using emergency accounting maneuvers. These steps, known as "extraordinary measures," allow the government to borrow additional funds without exceeding the debt ceiling.
However, Yellen warned lawmakers this week that if Congress fails to raise or suspend the debt ceiling, the federal government will exhaust those extraordinary measures by October 18. In a letter to Congress, Yellen wrote, "At this point, we expect the Treasury Department to be left with very limited resources that will be depleted quickly. It is uncertain whether we will continue to meet all of the nation's commitments after that date."
The so-called X-date should be viewed as the Treasury's best guess and not as a precise deadline that relies on exact science. In other words, America could reach the debt ceiling days before or after October 18. Given the risks—JPMorgan Chase CEO Jamie Dimon warned that a default would cause "a catastrophic chain reaction of unbelievable proportions that would harm America for 100 years"—it would be perilous for Congress to get too close to the X-date, let alone exceed it.
