Janet Yellen, US Treasury secretary, spoke during the Independent Community Bankers Of America (ICBA) Capital Summit in Washington, DC, US, on Tuesday, May 16, 2023.
Nathan Howard | Bloomberg | Getty Images
Secretary of the Treasury Janet Yellen said Sunday that “tough choices” will have to be made about which bills cannot be paid if the debt ceiling is not raised.
Yellen reaffirmed her warning that the United States could default on its debt early June 1stwhich he said could cause widespread “economic turmoil.” There will be no good consequences if Congress fails to act, he said.
“We’re focused on raising the debt ceiling, and there will be tough choices if that doesn’t happen,” he said on NBC’s “Meet the Press.” “There will be no acceptable consequences if the debt ceiling is not raised, regardless of the decisions we make.”
Revolt of debt ceiling necessary for the government to cover spending commitments already approved by Congress and the president to avoid default. Raising the debt ceiling doesn’t allow for new spending, but House Republicans have said they won’t lift the limit if Biden and lawmakers don’t agree to future spending cuts.
Because of this, the on-again, off-again deliberations on Capitol Hill it’s tense.
president Joe Biden said Sunday Republicans “need to move from their extreme position” during a press conference before he left for the Group of Seven Summit in Japan. After negotiations broke down on Saturday, Biden said he plans to call the House Speaker Kevin McCarthyR-Calif., on his way back to Washington.
“It’s time for Republicans to accept that there is no bipartisan deal to be made, only on their partisan terms,” Biden said.
McCarthy said the reporters on Saturday that the White House had “moved backwards,” adding that he did not think negotiations could continue until Biden returned to the U.S.
At the Independent Community Bankers of America Capital Summit Tuesday, Yellen said The White House Council of Economic Advisers found that a default could lead to an economic downturn as severe as the Great Recession, with 8 million Americans losing their jobs. and the value of the stock market fell by about 45%.
He also noted a report by Moody’s Analytics that found similar numbers with more than 7 million Americans out of work and $10 trillion in household wealth depleted. Yellen also warned that breaching the debt ceiling could affect essential government services.
Biden said Sunday that he thought a deal could be reached with Republicans, but that it was not certain.
“I can’t guarantee they won’t force a default by doing something bad,” he said.