US Treasury Secretary Janet Yellen said on Monday that new data confirmed her previous warning that the United States might default on its debt as of June 1 unless Congress raises the public debt ceiling.
US Treasury Secretary Janet Yellen said on Monday that new data confirmed her previous warning that the United States might default on its debt as of June 1 unless Congress raises the public debt ceiling.
And Yellen warned of “catastrophic” consequences if the US administration became unable to pay its bills, which would make it unable to pay the wages of federal employees, which would lead to a significant increase in interest rates, with the accompanying impact on companies. and mortgage holders.
“Our assessment continues to be that the Treasury will likely not be able to meet the government’s obligations in full if Congress does not raise or suspend the public debt ceiling by early June, and possibly on June 1,” said a letter to Republican Speaker of the House Kevin McCarthy. /June”.
The United States reached the borrowing ceiling of $ 31.4 trillion in January, and the Treasury Department took exceptional measures that allow it to continue financing state activities.
But if Congress does not raise the debt ceiling or suspend it before the extraordinary tools are exhausted, the country will be threatened with default on its obligations, with dire repercussions for the economy.
US President Joe Biden confirmed Monday that he will meet Tuesday with leaders of the parliamentary opposition, including the Speaker of the House of Representatives, in an attempt to dispel the risk of default.
A meeting was supposed to take place last Friday between Biden and McCarthy and three parliamentary officials, after a first round of talks that did not lead to much progress on May 9.
However, the meeting was postponed and the teams from the various sides have been negotiating since then.
“I’m still optimistic because I’m an instinctive optimist,” Biden said Sunday, “but I really believe there is a desire on their part and on our part to reach an agreement. I think we will reach that.”
For weeks, politicians, bankers and the White House have been warning that the US is on the verge of a default that threatens dire consequences, including a looming recession and a global financial contagion.
