In her speech at the event organized by the Wall Street Journal, US Treasury Secretary Janet Yellen stated that the Treasury and US President Joe Biden will face difficult choices if Congress does not act to raise the debt ceiling.
Pointing to the difficulty of telling exactly on what day the resources will run out, Yellen said she believes an agreement to avoid default is possible.
Recalling that President Biden has proposed changes that will reduce the budget deficit by 1 trillion dollars, Yellen noted that if an agreement is not reached, there will be some obligations that the government cannot pay.
“We have to raise the debt ceiling”
Stating that payment prioritization is not operationally possible for the government, Yellen said, “We have to raise the debt ceiling.” he said.
Yellen mentioned that there is some stress in the financial markets about the debt ceiling and that some Treasury bills with maturities up to mid-June are trading at higher interest rates.
Reiterating her warning of June as the debt default date, Yellen said she would update the US Congress on government finances shortly.