By Andrea Shalal
Niigata, Japan (Reuters) – U.S. Treasury Secretary Janet Yellen said on Saturday that the showdown over raising the U.S. debt ceiling was “more serious than in the past.” “difficult”, but she said she still hopes to find a solution to avoid the first U.S. default An update on when the Treasury will run out of money to pay the government’s bills in the coming weeks.
The U.S. Treasury Secretary has repeatedly called on Congress to agree to raise the federal borrowing limit of $31.$4 trillion to avoid the ensuing U.S. debt default “Economic and Financial Catastrophe”.
UK finance minister Jeremy Hunt told reporters the standoff posed a “very serious” threat to the global economy.
Yellen said she estimated last week that the Treasury Department may not be able to meet its payment obligations as early as June 1, echoing a CBO report warning Friday Consensus said there was a “significant risk” of default in the first two weeks of June.
Democratic President Joe Biden has insisted that Congress has a constitutional obligation to unconditionally raise the cap to fund previously approved spending. Republicans, who control the House of Representatives, want Biden to agree to sweeping budget cuts to secure their deal.
Unlike most developed countries, the US has a cap on how much it can borrow. As government spending exceeds revenue, lawmakers must periodically raise the cap.
Polarization
Yellen said this was since
reflecting continued polarization in the US under Donald Trump’s presidency.
“It’s certainly not positive for relationships, status in the world, credibility,” she said. “Maybe it’s harder this time, but I hope … we can find a solution.”
She said it was a positive sign that “almost everyone” was at the Biden meeting last Tuesday Meetings with congressional leaders agreed that a U.S. default was unacceptable.
With Biden expected to reconvene the group early next week, Yellen said he still sees attending Friday’s G7 summit in Hiroshima as a priority, although she noted he had said He could cancel the trip if not enough progress is made to end the impasse.
Despite the debt ceiling issue, Yellen said she still believes the Biden administration has reasserted the leadership of the United States and other G7 leaders in the world and is grateful that they have “relative to Trump’s The Trump administration has turned the dial 31 degrees.”
She believes there are no good options for prioritizing payments in the event of a default, but concedes that as revenues rise, they could technically be processed at once, leading to a sort of rolling default. Payments of principal and interest are handled separately.
In a report this week, the Bipartisan Policy Center said some Treasury officials believed the approach was 2011 confrontation.
“We shouldn’t be talking about that,” Yellen said. “We should be talking about raising the debt ceiling. Every plan has serious shortcomings.”
