This could be really bad news for U.S.: Treasury Secretary sees risk of recession

Written by Henrik Rothen

Sep.30 - 2023 7:59 AM CET

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Photo: Wikipedia Commons
Photo: Wikipedia Commons
Treasury Secretary sees risk of recession.

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The U.S. Treasury Secretary, Janet Yellen, has warned that a full-scale government shutdown could have far-reaching consequences, potentially tipping the American economy into a recession.

In an interview with NPR, Yellen stated that while she couldn't predict the outcome, she believes it's a risk factor.

Congress has until September 30 to agree on temporary funding for government activities before the new fiscal year starts on October 1.

A government shutdown would mean that all federal employees are sent home without pay, and federal institutions like ministries, museums, and national parks would close.

If Democratic and Republican politicians fail to agree on a new budget, the U.S. will face its fourth government shutdown in just a decade. Republicans, who hold the majority in the House of Representatives, have so far failed to internally agree on a funding proposal to present to the Senate, where Democrats hold the majority.

This internal disagreement is largely due to resistance from far-right politicians, much to the frustration of Kevin McCarthy, the Republican leader of the House.

Republicans are currently drafting four different bills that reflect extensive cuts in the government budget, which the far-right wing is pushing for.

However, these are likely to be rejected by Democrats, as the cuts are far removed from the budget that President Joe Biden proposed earlier this year.

The Republican majority in the House stands at 221 against 212, meaning the party cannot afford many defections.

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