US Treasury Secretary Janet Yellen described today, Saturday, the crisis over raising the US debt ceiling as “more difficult” than before, but she still hopes that a solution can be found to prevent the first debt default in US history.
Yellen told Reuters, in an interview on the sidelines of a meeting in Japan of Group of Seven finance officials, that she hopes to inform Congress within the next two weeks of when the Treasury will run out of money to pay government bills.
Yellen repeatedly appealed to Congress to agree to raise the $31.4 trillion federal borrowing ceiling to prevent an “economic and financial catastrophe” that would occur if the United States defaulted on its debts.
British Finance Minister Jeremy Hunt told reporters that the confrontation between Yellen and Congress posed a “very serious” threat to the global economy.
“It would absolutely be devastating if America’s gross domestic product … was derailed by no deal,” Hunt said on the sidelines of the Group of Seven meetings.
Yellen said her estimate last week that the Treasury Department might not be able to meet its payment obligations by June 1 was consistent with a report on Friday from the Congressional Budget Office warning of a “grave risk” of default in the first two weeks of the term. June.
President Joe Biden, a Democrat, insists that Congress has a constitutional duty to raise the debt ceiling unconditionally to pay previously approved expenditures. While the Republicans, who control the House of Representatives, want Biden to agree to deep budget cuts to secure their approval.
Unlike most developed countries, the United States caps the amount it can borrow. Legislators must raise that cap periodically, given that the government spends more money than it makes.
The most difficult
Yellen says the first major confrontation over the debt ceiling since 2011 reflects the continued division of the United States into opposing sides after the presidency of Donald Trump.
“It is definitely not positive for relations, global standing and credibility,” she added. “Maybe this time it will be more difficult, but I hope…we will find a solution,” she added.
Yellen said it was a positive sign that “nearly everyone” in a meeting Biden held with congressional leaders on Tuesday would agree that it would be unacceptable for the United States to default on the debt.
Yellen said that Biden, who is expected to meet again with congressional leaders this week, still considers attending the G7 summit that begins next Friday in Hiroshima a priority, but she quoted him as saying he might cancel the trip unless enough progress is made. to end the impasse.
Despite the debt ceiling battle, Yellen says she is still convinced that the Biden government has re-established US leadership in the world, noting that other leaders of the group are taking a completely different stance than they used to towards the Trump administration.
In a report this week, the bipartisan Policy Center said that some Treasury officials considered this approach the most realistic and least damaging during the 2011 crisis.
“We shouldn’t talk about it,” Yellen said. “We should talk about raising the debt ceiling. Every plan has serious downsides,” she added.