Yellen Warns Of Debt Default As Early As June 1

US Risks Defaulting on Debt as Early as June 1, Warns Treasury Secretary

The United States risks defaulting on its debt as early as June 1, according to Treasury Secretary Janet Yellen. In a letter sent to leaders in Congress, Yellen warned that if Congress does not raise or suspend the debt limit before that time, the government will be unable to continue to satisfy all of its obligations.

The Consequences of Defaulting on Debt

Experts have warned that a default this summer could cripple the U.S. economy without a deal to raise the borrowing limit for the federal government. The Treasury Department says Congress has acted upon 78 times since 1960. If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm the country’s global leadership position, and raise questions about its ability to defend its national security interests.

The Political Fight Over Raising the Debt Ceiling

Republicans and Democrats have been engaged in political fighting over raising the debt ceiling. On Wednesday, the GOP-led House narrowly passed a bill called the “Limit, Save, Grow Act of 2023,” which would suspend the debt ceiling through March 31, 2024, or until an increase in debt of $1.5 trillion — whichever comes first — in exchange for a host of spending cuts. President Joe Biden and his fellow Democrats have insisted on a “clean” debt ceiling bill separate from any spending cuts or any policy concessions. Meanwhile, House Speaker Kevin McCarthy (R-CA) has pushed for negotiations.

What Needs to Be Done

Yellen said it is “impossible to predict with certainty the exact date when Treasury will be unable to pay the government’s bills, and I will continue to update Congress in the coming weeks as more information becomes available.” She warned Congress that time is of the essence and urged them to protect the full faith and credit of the United States by acting as soon as possible.

Conclusion

The United States risks defaulting on its debt, which could have severe consequences for the country’s economy and global leadership position. It is up to Congress to act quickly and raise the debt ceiling to avoid a default. The Treasury Secretary has warned that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States.