WASHINGTON (AP) — Treasury Secretary Janet Yellen said Sunday that there is “no good option” to avoid economic “calamity” if Congress does not raise the debt ceiling in the coming weeks.
The official did not rule out that President Joe Biden evade Congress and act on his own to avoid what would be the first federal default in the history of the United States.
The comments add even more urgency to a meeting Biden will hold with congressional leaders from both parties on Tuesday.
Democrats and Republicans are locked in a dispute over whether the debt ceiling – currently at $31.381 trillion – should even be up for negotiation. Republicans, led by House Speaker Kevin McCarthy, are demanding spending cuts in exchange for allowing a new cap, while Biden insists the threat of a default should not be used in budget negotiations.
Yellen, interviewed on ABC’s “This Week,” offered a bleak picture if the debt ceiling isn’t lifted before the Treasury Department runs out of the “extraordinary measures” used to operate under the current limit. That moment, the official indicated, will probably be at the beginning of June.
“Whether it’s interest payments on the debt, or to Social Security recipients or to Medicare providers, we just won’t have enough cash to meet all of our obligations,” Yellen said. “And there is a consensus that financial and economic chaos will ensue.”
An increase in the debt ceiling would not be an authorization for more public spending. It would only allow borrowing to pay for expenses that have already been approved by Congress.
Biden will meet at the White House on Tuesday with McCarthy, Democratic House Minority Leader Hakeem Jeffries, Democratic Senate Majority Leader Chuck Schumer and Senate Republican Minority Leader Mitch McConnell.
