The confrontation over the federal debt limit is already having a negative impact on American economybecause it leads to rising cost of borrowing, as a result of which the country’s debt is burdened. The US Treasury Secretary came to this alarming conclusion. Janet Yellen and does not cease to warn about the consequences of the suspension of payments USA.

In his speech to public figures banks in Washington, Ms. Yellen referred to what happened in 2011 with the US debt limit confrontation, which resulted in the first downgrade of a superpower’s credit rating in US history. “Time is up. Every day when Congress does not work, we are facing an increase in financial costs that could slow down the American economy,” he said at an Independent Community Bankers of America event.

“The American economy hangs by a thread.” He also added that the delay is equally damaging to the livelihoods of millions of Americans. “We can’t waste time. Congress needs to set a debt limit as soon as possible,” he said.

Ms. Yellen told Congress yesterday that the department is expected to be able to service the US government’s financial obligations only until June 1, without raising the debt limit. Thus, he tried to increase pressure on the Republicans in Congress and the White House in order to reach an agreement in the coming days. As Ms. Yellen pointed out, the 2011 crisis, when lawmakers raised the debt limit just before the government was forced to default, shows the serious consequences of the delay. Consumer confidence then fell more than 20%, while the S&P 500 fell 17% and the cost of mortgages and auto loans rose.

According to the Treasury Secretary, allowing the US to default would provoke an economic and financial disaster, jeopardize the country’s reputation and undermine the foundations of US global economic leadership.

Public opinion in the US is divided over whether debt growth should be accompanied by spending cuts.

Investors have already begun to show reluctance to buy U.S. debt maturing in early June, Yellen said, and the stalemate is exacerbating the overall debt burden. He was also bullish on the health of U.S. local banks, noting that many of them reported higher net profits in 2022 than before the pandemic, even as some regional banks are under increased pressure after the collapse of two large regional banks – Bank of Silicon Valley and Signature Bank in March.

There were some “aftershocks”, including its collapse. Bank of the First Republic, but the US Treasury Secretary says “there is no sign of change in the fundamental health of the banking system.” However, the Ministry of Finance remains vigilant and continues to closely monitor the situation. Americans are worried about the prospect of a federal government default unless Congress raises the debt ceiling, according to a poll by Reuters and research firm Ipsos, but opinion is divided on what to do next.

The poll shows that public opinion is also not in favor of the president. Joe Biden neither them Republicans Congress, which began negotiations to break the $31.4 trillion government debt impasse. The US Treasury Department says spending money will run out June 1 unless Congress raises borrowing limits. Economists say a default will destroy international markets and plunge the US into recession. According to the poll, 76% of Americans believe that both sides should come to an agreement, since the default will increase the financial pressure on households. Among them, 84% of citizens who call themselves Democrats, and 77% who call themselves Republicans. Only 29% consider the question “overblown”.

American public opinion is also divided on how to solve the problem. 49% believe that Congress should quickly and unconditionally raise the national debt ceiling to prevent a default. This position is occupied by 68% of Democrats and 39% of Republicans. But 51% of Americans say the debt limit should not be raised without drastic spending cuts. In short, he takes the position of the Republicans, who have a majority in the House of Representatives. This position is occupied by 69% of Republicans and 42% of Democrats.