Yellen warns of ‘economic chaos’ unless Congress resolves debt ceiling

US Treasury Secretary Janet Yellen holds a press conference at the US Treasury Department in Washington, DC on April 11, 2023.

Stefani Reynolds | AFP | Getty Images

Treasury Secretary Janet Yellen said on Sunday that not raising the debt ceiling would lead to a “sharp economic slowdown” in the United States, and she reiterated her warning that the Treasury Department could run out of measures to pay its debts by June.

“Our current projection is that in early June, a day will come when we cannot pay our bills unless Congress raises the debt ceiling, and that’s something I strongly urge Congress to do.” , Yellen told ABC’s “This Week.”

Yellen said the United States has already used “extraordinary measures” to avoid default, and that’s not something the Treasury Department can continue to do. She said Congress must take action to avert an “economic catastrophe.”

“It is widely believed that financial and economic chaos will ensue,” Yellen said.

Lawmakers have been trying to find a way forward to raise or suspend the debt ceiling, which would allow the United States to pay its bills on time. But they are currently at an impasse, which raises the prospect of default.

Yellen called for decisive and swift action. In a letter to Speaker of the House Kevin McCarthy, R-California, on Monday, Yellen said new tax revenue data has forced the department to increase its estimate of when the Treasury Department “will not be able to continue to meet all government obligations” potentially as of June 1. This date is earlier than Wall Street economists expected.

On Monday, President Joe Biden called on the “big four” congressional leaders — Senate Majority Leader Chuck Schumer, DN.Y., Senate Minority Leader Mitch McConnell, R-Ky., McCarthy and the House Democratic Leader Hakeem Jeffries, NY — to invite them to a May 9 meeting at the White House to discuss the debt limit, a White House official told NBC.

Jeffries said Sunday that the Biden-hosted meeting was “very important” and will help the United States find a way forward.

“We have to avoid flaws, period,” he told NBC’s “Meet the Press” show.

But for Sen. James Lankford, R-Okla., the debt ceiling meeting should have happened much sooner. He said the issue arose the week after the November election and President Biden’s refusal to negotiate was “staggering”.

“Everyone knew this was coming and the president refused to be able to negotiate about it,” he told ABC’s “This Week” on Sunday.


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