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WTOP

02:55 min | 7 months ago

"treasury department treasury" Discussed on WTOP

"The federal government could be at risk of a payment default as early as July if the debt limit isn't raised. That's the warning tonight from the nonpartisan congressional budget office. The CBO put out this estimate and its outlook for the federal deficit and economy in the next ten years. It all comes as Congress braces for a fight over raising the debt ceiling, which would allow the government to continue paying its bills. Well, joining us live to talk more about this, Andy Durham, he covers the Treasury Department and economic policy for The Wall Street Journal and good to have you tonight. Thanks for joining us. Thanks for having me. So this is more or less in line with what we knew that lawmakers must come up with a deal by spring or early summer. Is this interpreted as a reminder that this should be handled sooner rather than later? It certainly no surprise to anyone on Capitol Hill that the debt limit needs to be raised sometime in the next few months. What was interesting about the forecast today, which is something that the CBO produces on a regular basis when Congress must raise the debt limit or faces the possibility of having to raise debt limit. Is that there is maybe a little bit more time than some other forecast had suggested before. The Treasury Department treasury secretary Janet Yellen, she had said, last month that the debt limit needed to be raised by possibly as early as early June. And so this forecast pushes the timeline back a little bit from what the Treasury Department had forecast previously. Now, as everyone knows, Republicans want to see significant cuts before they agree to raise the debt ceiling. If that doesn't happen, if there's no agreement on this, can you talk about what the consequences would be to the economy? So the consequences of not raising the debt limit in time could be wide ranging and profound. So one of the most concrete consequences would be the financial market reaction to the possibility that the U.S. would not make its payments on its debts to bondholders. U.S. government treasuries, U.S. government securities are a safe haven asset for financial markets across the world. And so the possibility that those assets would no longer seem so safe could have a ripple effects across not only financial markets, the United States, but across the world. And so you could see huge downturns and bond markets and stock markets and you could see that ripple out to the real economy in terms of interest rates on everything from car loans to mortgages to credit card loans, things like that. And then on top of that, if the U.S. government didn't make its payments to social security recipients and contractors and other people who receive money from the government regularly, there would be an economic impact there in terms of people not having those payments on time either. So there are a lot of different ways that things could go wrong if the government defaulted on its debt. Something we will be talking more about in the days and weeks ahead, Andy, thanks for joining us tonight. Thanks so much. Thanks for having me. Andy Durham covers the Treasury Department and economic policy for The