Yesterday, US Treasury Secretary Janet Yellen described the crisis related to 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 the US Congress within the next two weeks of when exactly the Treasury will run out of money to pay government bills.
Yellen repeatedly appealed to Congress to agree to raise the federal borrowing ceiling of $31.4 trillion, 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 poses a very serious threat to the global economy.
“It would absolutely be devastating if America’s gross domestic product… got derailed by not reaching a deal,” Hunt added, on the sidelines of the Group of Seven meetings.
Yellen said her estimate last week that the Treasury Department may not be able to meet payment obligations by June 1 is consistent with a report issued yesterday from the Congressional Budget Office, warning of a “grave risk” of default in the first two weeks of 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.