As controversy and disagreement continue to mount over raising the federal debt ceiling, Treasury Secretary Janet Yellen says that the hard deadline for raising it is June 1, according to Newsmax. Yellen’s comments came while speaking on NBC’s “Meet the Press.”
While the debt ceiling currently sits at $31.4 trillion debt ceiling, Yellen warned that the treasury will run out of money to give to Americans if it is not raised, which would result in the country defaulting on the debt. She said that she is anticipating a situation where the U.S. will be unable to pay all of its bills as early as June 1. She claims that her assessment has not changed, and she remains in communication with Congress.
The potential of default has already sent borrowing costs for the U.S. government to 5 percent, according to NBC. Americans will see the economic situation worsen. Just as the Federal Reserve is raising interest rates to curb inflation, interest rates will shoot up even more. The stock market will take a nosedive. Businesses will have a harder time getting loans and employment would likely suffer as well. The federal government will then have to prioritize who it will be paying first: bondholders or Social Security and Medicare funds?
However, Yellen has stated that the system has no way of choosing one recipient over the other if the situation ever gets to that point.
The offers from Republicans amid negotiations are being considered “unacceptable” by President Biden. He has now offered to cut spending and adjust taxes in order to reach a consensus. Biden said that he will speak with House Leader Kevin McCarthy on his trip back from the Group of Seven (G7) summit in Japan.
The president has also said that he may try to invoke the 14th Amendment to raise the ceiling without the approval of Congress, which has never been done before, but noted that he might be out of time if it gets to that point.