Yellen says ‘arduous decisions’ will need to be made if debt ceiling is not raised

Janet Yellen, US Treasury secretary, speaks through the Independent Community Bankers Of America (ICBA) Capital Summit in Washington, DC, US, on Tuesday, May 16, 2023. 

Nathan Howard | Bloomberg | Getty Images

Treasury Secretary Janet Yellen stated Sunday that “hard choices” will need to be made about which payments will go unpaid if the debt ceiling is not raised.

Yellen reaffirmed her warning that the United States might default on its debt as early as June 1, which she has stated might trigger widespread “economic chaos.” There will be no good outcomes if Congress fails to take motion, she stated.

“We’re focused on raising the debt ceiling, and there will be hard choices if that doesn’t occur,” she informed NBC’s “Meet the Press.” “There can be no acceptable outcomes if the debt ceiling isn’t raised, regardless of what decisions we make.”

Lifting the debt ceiling is vital for the federal government to cowl spending commitments already authorised by Congress and the president so as to stop default. Raising the debt ceiling does not authorize new spending, however House Republicans have stated they will not raise the restrict if Biden and lawmakers do not agree to future spending cuts.

As a consequence, the on-again, off-again deliberations on Capitol Hill have been tense.

President Joe Biden stated Sunday that Republicans “need to move from their extreme position” throughout a press convention forward of his departure from the Group of Seven Summit in Japan. After negotiations stalled late Saturday, Biden stated he deliberate to name House Speaker Kevin McCarthy, R-Calif., on his approach again to Washington.

“It’s time for Republicans to accept that there is no bipartisan deal to be made solely, solely, on their partisan terms,” Biden stated.

McCarthy told reporters on Sunday after arriving on the Capitol that he deliberate to converse to Biden “in the next hour,” including that he is glad the president is returning to the U.S.

“I think he’s got to get away from the socialist wing of the Democratic party and represent America. And that means both sides have to have compromise,” McCarthy stated. “I’ve been there the entire time.”

At the Independent Community Bankers of America Capital Summit Tuesday, Yellen said the White House Council of Economic Advisers discovered {that a} default could lead on to an financial downturn as dangerous because the Great Recession, with 8 million Americans dropping their jobs and the inventory market’s worth falling by about 45%.

She additionally famous a Moody’s Analytics report which discovered related numbers with greater than 7 million Americans out of labor and $10 trillion in family wealth evaporated. Yellen additionally warned {that a} debt ceiling breach might have an effect on important authorities providers.

Biden stated Sunday he thinks an settlement can be reached with Republicans, however that it is not sure.

“I can’t guarantee that they wouldn’t force a default by doing something outrageous,” he stated.

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