Treasury Secretary Janet Yellen said the only good outcome in the current US debt standoff is for Congress to raise the ceiling.
(Bloomberg) — Treasury Secretary Janet Yellen said the only good outcome in the current US debt standoff is for Congress to raise the ceiling.
“What global markets and American households and businesses need to see is that we have a Congress that is committed to paying the bills,” Yellen said Friday in an interview with Bloomberg Television.
“If Congress fails to do that, it really impairs our credit rating,” Yellen added, speaking on the sidelines of a Group of Seven gathering of finance officials in Niigata, Japan.
Yellen has mostly declined to spell out what her department would do if Congress fails to raise or suspend the debt limit before the Treasury finds itself unable to cover all the government’s obligations.
Back in Washington, President Joe Biden and House Speaker Kevin McCarthy postponed a meeting on the debt ceiling set for Friday. People familiar with the talks said the postponement was a sign that staff-level talks were yielding progress.
Biden and congressional Republicans have been locked in disagreement for weeks over raising the US federal government’s $31.4 trillion borrowing limit. GOP leaders have demanded promises of future spending cuts before they approve a higher ceiling. Biden has insisted on a “clean” increase, with budget talks kept separate.
The standoff is gaining close scrutiny both within the US and around the world as policymakers, businesses and households fret about the possible impact of the US defaulting.
Yellen reiterated her view that a default would be “an economic and financial catastrophe.” She said she had spoken with company executives in recent days to hear their concerns.
“Wall Street executives and American business people have always spoken out about their concerns about the debt ceiling,” she said. “We want to hear voices of people who will be affected by this.”
Yellen added that it was still unclear when the Treasury would run out of funds. She has told Congress the Treasury could run out of available cash as soon as June 1. In the interview the Treasury chief said she intends to update Congress as that date approaches.
“As we get closer I may be able to provide more refined guidance,” she said.
The government reached the statutory cap on borrowing in January and the Treasury has since been using special accounting measures to make cash available.
–With assistance from Annmarie Hordern, Justin Solomon, Malcolm Scott and Joe Mayes.
(Adds more comments from interview)
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