Biden Administration's Efforts to Avert Economic Upheaval
Speaking at G7 finance officials meeting in Japan, Yellen shared that the Biden administration is working tirelessly to prevent the economic turmoil resulting from Congress not raising the $31.4 trillion debt limit.
Wall Street Bankers and Possible Debt Default
The Treasury Secretary has discussed the debt limit issue with business leaders and plans to meet with senior Wall Street bankers next week to address the possibility of the U.S. defaulting on its debt for the first time since 1789.
Wall Street and Business Owners' Input on Debt Limit Debate
Yellen believes that Wall Street leaders and business owners should voice their concerns about how the debt limit debate affects the U.S. and global economies, generating significant uncertainty.
Global Economic Impact of U.S. Default Risk
World Bank President David Malpass warned that the risk of a U.S. default exacerbates issues in the slowing global economy. Rising interest rates and high debt levels are already hindering investments needed for increased output.
Political Divide Over Raising Debt Limit
Democrats and Republicans in the U.S. House of Representatives remain divided over the need to raise the debt limit, with President Joe Biden calling it a constitutional duty and Republicans demanding budget cuts in exchange for raising the cap.
The Debt Ceiling in the United States
Unlike most developed nations, the U.S. has a debt ceiling that lawmakers must periodically raise due to government spending exceeding revenue.
Yellen on Breaching the Debt Ceiling
Yellen avoided answering whether Treasury would continue making payments on securities if the debt ceiling was breached. She emphasized the importance of Congress raising the debt limit, which has occurred nearly 80 times since 1960.
Refined Guidance on Treasury Cash Depletion
As the projected date for the Treasury to run out of cash nears, Yellen said the Treasury could provide more precise guidance on when that will occur.
International Concerns Over U.S. Debt Ceiling
German Finance Minister Christian Lindner expressed hope that U.S. politicians would make a responsible decision to raise the federal debt ceiling, warning of risks to the global economy if they fail.