Treasury Secretary Yellen again warns about failure to lift debt ceiling
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Treasury Secretary Janet Yellen said the U.S. is getting closer to not being able to pay all its bills.
“If Congress doesn’t act to raise the debt ceiling, and if we hit the so-called X-date without that occurring, there will be some obligations that we will be unable to pay,” Yellen said in a video appearance at The Wall Street Journal CEO Council Summit on Wednesday, according to the Journal.
Yellen has previously said the U.S. could default as soon as June 1, but in her remarks Wednesday, she indicated the date of default could come later in the month.
“It seems almost certain that we will not be able to get past early June,” she said.
Yellen said President Joe Biden and the Treasury Department would “face very tough choices if Congress doesn’t act to raise the debt ceiling” and that it wouldn’t be realistic to expect the federal government to prioritize some payments over others.
“Prioritization is not really something that is operationally feasible,” she said.
Biden said Thursday that he and Speaker Kevin McCarthy have had “several productive conversations and our staffs continue to meet as we speak” and that they had made progress on negotiations.
“I’ve made clear time and again defaulting on our national debt is not an option,” Biden said, speaking at the White House. “The American people deserve to know that the social security payments will be there, veterans hospitals will remain open, and that economic progress will be made and we’re going to continue to make it. Default puts that all at risk.”
He said congressional leaders agree that there will be no default but that he and McCarthy have different views of “who should bear the burden of additional efforts to get our fiscal efforts in order.”
“It’s about competing visions for America,” he said.
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McCarthy, a California Republican, said Thursday that negations are not easy but that he’s a “total optimist.”
“We will get this done,” McCarthy told reporters. “And we will have a better bill because of it.”
Earlier this week, McCarthy blamed Democrats for not raising the debt ceiling when they controlled both chambers of Congress and he said it was reasonable and rational for the U.S. to spend less next year than it spent this year.
The House began its Memorial Day recess Thursday and isn’t scheduled to be back in session until June 5, but negotiations will continue. Lawmakers are expected to to be on call to return to Washington, D.C., for a vote with 24 hours’ notice and they will have 72 hours to read the text of a bill before voting on it, Republican Majority Leader Steve Scalise, R-La., said.
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During her appearance Wednesday, Yellen also spoke about banking and said a greater concentration of large banks wasn’t ideal and that there should be banks of different sizes.
“Banks of different types serve different needs, and I think that’s a great strength of our banking system,” she said. “We want to make sure that there’s healthy competition throughout the economy, including in the banking system.”
Since March, three U.S. banks of have failed, Silicon Valley, Signature and First Republic, which became the second largest bank collapse in U.S. history and was acquired by JPMorgan Chase.
