Yellen warns of ‘chaos’ if US fails to raise debt ceiling
WASHINGTON
U.S. Treasury Secretary Janet Yellen has warned that unless Congress acts soon to raise the nation’s debt ceiling, “financial and economic chaos would ensue.”
Republicans have been pressing President Joe Biden to strike a deal to provide spending cuts in exchange for lifting the national borrowing limit.
“It simply is unacceptable for Congress to threaten economic calamity for American households and the global financial system as the cost of raising the debt ceiling,” she told ABC talk show “This Week” on May 7.
Yellen had warned last week that the United States could run out of money to pay its financial obligations as early as June 1.
The ceiling on U.S. public debt is legally fixed and can be raised only by passage of congressional legislation signed into law by the president.
The Republican-led House of Representatives voted in late April to lift the borrowing limit but only with drastic cuts to rein in what that party sees as excessive spending.
The bill has no chance of being adopted in the Senate, with its Democratic majority.
Biden has so far refused to negotiate, noting that the debt ceiling has routinely been raised scores of times over the years - including under former Republican president Donald Trump.
Biden is set to meet today with the leaders of both parties in Congress.
The impasse has raised the possibility of the country’s first-ever default, with profound implications for the U.S. and global economies.
Analysts say markets would be shaken and interest rates would lastingly rise, causing households and businesses to pull back on spending.
A default, Biden’s economic advisors warn, could cause the loss of eight million jobs and send GDP plunging by six percent.
