The US has “no good options” to avoid an “economic calamity” if lawmakers refuse to raise the debt ceiling in the next few weeks, Treasury Secretary Janet Yellen said Sunday.
The nation will soon reach its $31.4 trillion borrowing limit and will default on its payments unless the measure is taken.
“Our current projection is that in early June, a day will come when we’re unable to pay our bills unless Congress raises the debt ceiling, and it’s something I strongly urge Congress to do,” Yellen told ABC’s “This Week.”
“This would be really the first time in the history of America that we would fail to make payments that are due. And, you know, whether it’s defaulting on interest payments that are due on the debt or payments due for Social Security recipients or to Medicare providers, we would simply not have enough cash to meet all of our obligations.”
“It’s widely agreed that financial and economic chaos will ensue,” Yellen said, saying that frightening scenario could occur as early as June 1.
The White House has said such a situation would cause the stock market to drop by 45%, and cited a recent Moody’s analysis that up to 8 million jobs could be lost.
Yellen said the debt ceiling had been raised by bipartisan lawmakers 78 times before, including three instances under former President Donald Trump.
“It simply is unacceptable for Congress to threaten economic calamity for American households in the global financial system as the cost of raising the debt ceiling and getting agreement on budget priorities,” she warned.
A GOP House bill that extended the debt limit in exchange for slashing spending and tax breaks on renewable energy while canceling President Joe Biden’s student debt forgiveness proposal was not expected to be advanced in the Democratic-controlled Senate or signed by Biden.
Biden was set to meet with the top four leaders of Congress Tuesday to discuss a path forward.
One of the four, House Minority Leader Hakeem Jeffries (D-NY), told NBC’s “Meet the Press” the issue shouldn’t be controversial.
“We have to avoid default, period,” the Brooklyn Democrat said, citing a “constitutional responsibility” to “protect the full faith and credit” of the US.
He stressed the White House was open to taking up spending cuts in a separate bill.
“President Biden has continued to make clear that we can have a discussion about the right balance of spending, investments and revenues to make life better for everyday Americans,” he said..
A group of 43 Senate Republicans on Saturday said they oppose a Democrat-favored, no-strings-attached raising of the debt ceiling.
The right-leaning coalition said “substantive spending and budget reforms” need to be “a starting point” in negotiations. Several prominent moderate Republicans did not sign the letter.
Sen. James Lankford (R-Okla.) told “This Week” Biden’s refusal to negotiate so far had been “stunning.”
“Everyone knew this was coming and the President’s refused to be able to negotiate about it,” he told “This Week.”
With Post wires