- Treasury Secretary Janet Yellen said Sunday that “difficult choices” will have to be made about which notes will not be repaid if the debt ceiling is not raised.
- President Joe Biden said Republicans “need to move from their extreme position” during a news conference before leaving the G7 summit in Japan.
- House Speaker Kevin McCarthy told reporters on Saturday that the White House had “stepped back.”
Janet Yellen, US Secretary of the Treasury, speaks during the Capital Markets Summit in Washington, D.C., United States, on Tuesday, May 16, 2023.
Nathan Howard | bloomberg | Getty Images
Treasury Secretary Janet Yellen said Sunday that “difficult choices” will have to be made about which notes will not be repaid if the debt ceiling is not raised.
Yellen reiterated her warning that the US could default on its debt as early as June 1, which she said could cause widespread “economic chaos”. She said there would be no good results if Congress failed to act.
“We’re focused on raising the debt ceiling, and there are going to be tough choices if that doesn’t happen,” she said in an interview on NBC’s “Meet the Press.” “There can be no acceptable outcomes if the debt ceiling is not raised, no matter what decisions we make.”
Raising the debt ceiling is necessary for the government to cover spending commitments approved by Congress and the president in order to prevent default. Raising the debt ceiling does not allow for new spending, but House Republicans have said they will not raise the limit if Biden and lawmakers do not agree to future spending cuts.
As a result, deliberations on Capitol Hill were tense.
President Joe Biden said Sunday that Republicans “need to move from their extreme position” during a news conference before leaving the G7 summit in Japan. After negotiations stalled late Saturday, Biden said he planned to call House Speaker Kevin McCarthy, D-Calif., on his way back to Washington.
“It’s time for Republicans to accept that no bipartisan deal is made solely on their partisan terms,” Biden said.
McCarthy told reporters on Saturday that the White House had “stepped back,” adding that he did not believe negotiations would be able to move forward until Biden returned to the United States.
At the Independent Capital Community of America Summit on Tuesday, Yellen said the White House Council of Economic Advisers found that a default could lead to an economic downturn as bad as the Great Recession, in which 8 million Americans lost their jobs and the stock market plunged in value. by about 45%.
She also pointed to a Moody’s Analytics report that found similar numbers with more than 7 million Americans out of work and $10 trillion in household wealth evaporating. Yellen also warned that breaching the debt ceiling could affect basic government services.
On Sunday, Biden said he believes a deal can be reached with the Republicans, but that is not certain.
“I can’t guarantee that they won’t be forced into default by doing something outrageous,” he said.
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