US (Washington Insider Magazine) -Although the US treasury has operated under huge amounts of debt for decades, it has consistently been bailed out before things became unmanageable with a series of bills that allow extra borrowing.
However, it seems the coffers are very close to being empty and Washington is yet to find a political solution. Washington ICAP chief economist Lou Crandall has said that as things stand, the Treasury will run out of money by October 22nd.
US Secretary of the Treasury Janet Yellen has said she estimates that deadline to be later this month also and has warned of the catastrophic global effects, were the US forced to default on debt. She claimed it would cause “serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States” adding “ it would be particularly irresponsible to put the full faith and credit of the United States at risk”
Things have come so close to the edge because of reluctance by Republican lawmakers to raise the borrowing limit, which has been a consistent sticking point in Capitol Hill for years. Some claim the impasses the disagreement regularly creates are just political theatre, as they’re always ultimately resolved. Yet this is the latest in the day the US has come before finding a passable solution. Whilst it is typically passed as part of wider legislative economic and budgetary packages, the possibility is being considered of passing a standalone bill to ensure the US doesn’t slide into disastrous territory.
The deputy assist secretary for economic policy at the Treasury Natasha Sarin has said the problem is linked to the endemic tax dodging by America’s wealthiest. According to her, more than $160 billion is missed out on every year because the wealthiest 1% do not pay their taxes. She said “These unpaid taxes mean policymakers must choose between rising deficits, lower spending on important priorities, or further tax increase to compensate for lost revenue — which will only be borne by compliant taxpayers.”
