Treasury Secretary Janet Yellen has emphasized that the idea of the United States defaulting on its debt should be considered “unthinkable” and would have severe consequences for the U.S. and global economy. Speaking to reporters ahead of the G-7 finance ministers and central bank governors meetings in Japan, Yellen addressed concerns about the possibility of a default, particularly in light of former President Donald Trump’s suggestion that Republican lawmakers let the nation default.
Yellen stated that defaulting on the U.S. debt would significantly undermine both the domestic and global economy and stressed that America should never default. She called for lawmakers to take the necessary steps to raise the debt ceiling, highlighting that there is no viable alternative to prevent a potential catastrophe.
While Yellen did not rank the various alternatives to raising the debt ceiling, she emphasized that raising it is the only reasonable course of action to avoid dire consequences. She urged Congress to act quickly, noting that defaulting on debt obligations can and should be prevented.
The Treasury Secretary reminded reporters that the U.S. Congress has raised or suspended the debt limit nearly 80 times since 1960. She emphasized that generating a crisis of their own making is not a wise approach and that the debt ceiling should be addressed promptly.
Yellen’s comments echo her previous warnings of an “economic catastrophe” if the U.S. fails to raise the debt ceiling in the coming weeks. She has previously highlighted the possibility of the U.S. running out of measures to meet its debt obligations as early as June 1. Last week, media reports indicated that her trip to Japan was cut short to ensure her continued involvement in efforts to address the debt ceiling issue.
During her press conference, Yellen expressed hope that the differences surrounding the debt ceiling issue can be resolved. She revealed that another meeting is scheduled for the following week, and staff members are working to bridge the gaps. Yellen remains optimistic that the debt ceiling will be raised, emphasizing the importance of timely action to avoid potential financial turmoil.
As the debate over raising the debt ceiling continues, Yellen’s firm stance underscores the gravity of the situation and the urgent need for Congress to act responsibly to safeguard the U.S. economy from the potential risks associated with defaulting on its debt obligations.