WASHINGTON — A failure by Congress to boost the U.S. debt ceiling could spark a “manufactured” crisis that derails economic progress, Deputy Treasury Secretary Wally Adeyemo said Friday.
Adeyemo, who has been meeting with world financial leaders in Washington this week in the course of the International Monetary Fund’s spring meetings, said continued delays in mountain climbing the $31.4 trillion debt limit threaten international confidence within the U.S. economy.
“It is vital that Congress lift the debt limit,” the highest Treasury official told CNBC’s “Squawk on the Street” on Friday. “The last item we want is a manufactured crisis in our country.”
Pushing off a bill to avoid debt default “will take away from that confidence that the world is showing” the U.S. and “would decelerate the momentum that we had,” Adeyemo said.
Economist Adewale “Wally” Adeyemo answers questions during his Senate Finance Committee nomination hearing to be Deputy Secretary of the Treasury within the Dirksen Senate Office Constructing, in Washington, D.C., February 23, 2021.
Greg Nash | Pool | Reuters
The Congressional Budget Office has warned that the federal government could default on its debt between July and September. The U.S. hit its borrowing limit earlier this 12 months, forcing the Treasury to take so-called extraordinary measures to maintain paying its bills. A primary-ever U.S. default on its debt could wreak economic damage around the globe.
The GOP has sought spending concessions in exchange for raising the debt limit. The White House has up to now refused to entertain the demands, resulting in an impasse. Republicans, led by House Speaker Kevin McCarthy, R-Calif., are preparing to present a plan next week for a yearlong suspension of the debt ceiling in exchange for cuts to certain spending programs and regulation changes, Bloomberg reported.
The GOP proposal, which Congress would vote on in May, would call for non-defense discretionary spending to stay at roughly the identical level because the fiscal 12 months 2022 with 1% growth per 12 months over 10 years, based on Bloomberg. Other measures include a “clawback” of unspent pandemic relief funds and work requirements for able-bodied Medicaid recipients aged 60 and under without dependent children, the outlet reported.
The proposal is unlikely to win Democratic support and change into law.
