Treasury Secretary Janet Yellen has described the current showdown over raising the U.S. debt ceiling as "more difficult" than in previous instances. Despite this, she remains hopeful that a solution can be found to prevent the first-ever U.S. default. British Finance Minister Jeremy Hunt has also expressed concern, stating that the standoff presents a "very serious" threat to the global economy.
Yellen to Update Congress on Treasury Fund Status
Yellen plans to update the U.S. Congress in the coming weeks about the precise point at which the Treasury will run out of funds to pay the government's bills. She has urged Congress to raise the $31.4 trillion cap on federal borrowing to avoid the "economic and financial catastrophe" that would follow a U.S. default on its debts.
Bipartisan Agreement to Prevent U.S. Default
Although the first major standoff over the debt ceiling since 2011 reflects the ongoing polarization in U.S. politics, Yellen believes a solution can be found. She takes it as a positive sign that almost all participants in a meeting hosted by President Joe Biden with congressional leaders agreed that a U.S. default would be unacceptable.
Biden's Prioritization of G7 Summit Amid Impasse
Despite the debt ceiling struggle, President Biden still considers attending the G7 summit in Hiroshima a priority. However, he has stated that he may cancel the trip if there isn't sufficient progress made toward resolving the impasse.
No Good Options for Prioritizing Payments in Default Scenario
Yellen argues that there are no ideal options for prioritizing payments in the event of a default. While it may be technically possible to process payments one day at a time as revenue comes in, this would result in a rolling default. She insists that the focus should be on raising the debt ceiling, as all alternative plans have significant downsides.
