US Yellen Sets Default Deadline Again: "Early June, Almost Certain"

As negotiations to raise the debt ceiling to prevent a default by the U.S. federal government face difficulties, U.S. Treasury Secretary Janet Yellen reaffirmed that a default could occur as early as early June.

On the 24th (local time), Secretary Yellen attended a Wall Street Journal (WSJ) forum and stated, "It seems almost certain that we will not get past early June." She explained, "It is difficult to say exactly when (cash and other resources) will be depleted," but maintained the existing position that early June is the default deadline. She added, "We will soon provide Congress with additional updates on the financial status." Amid recent speculation that spending adjustments could allow the government to hold out until mid-June, Secretary Yellen once again set early June as the deadline.

[Image source=Reuters Yonhap News]

Secretary Yellen has consistently warned that if Congress does not raise the debt ceiling, cash will be completely exhausted as early as June 1, leading to a default. On this day as well, she asserted, "U.S. Treasury securities are the foundation of the global financial system," and argued that if the U.S. fails to pay principal and interest on its debt on time, it would have widespread repercussions worldwide. She reiterated, "We must not allow the U.S. to go into default."

Secretary Yellen said, "We are committed to raising the debt ceiling without missing payments," but expressed concern that "if Congress does not take action to raise the debt ceiling and we reach the so-called X-day, there will be obligations we cannot pay." She did not provide specific answers regarding payment prioritization. Additionally, she confirmed that the Treasury is not making separate preparations for investors in anticipation of a default.

Earlier, The Washington Post (WP) outlined seven scenarios in the event of a default, including a stock market crash, sudden recession, unemployment, difficulties in Social Security and Medicare payments, a sharp increase in U.S. borrowing costs, economic repercussions spreading globally to countries holding U.S. Treasury securities, and a weakening of the dollar's status.

[Image source=EPA Yonhap News]

Meanwhile, Republican House Speaker Kevin McCarthy appeared on CNN the same day and evaluated that negotiations with the White House remain productive. However, he firmly maintained his previous stance that large-scale government spending cuts are a prerequisite for raising the debt ceiling, stating, "We need to cut spending more than last year." When asked how much more needs to be cut, he replied, "That's part of the negotiation. The Democrats don't want to spend less; they want to spend more," blaming the Democrats.

Earlier, the third meeting between President Joe Biden and Speaker McCarthy on the 22nd ended without significant progress. Since then, the working-level negotiation teams on both sides have continued discussions daily, but as no solution has been found, concerns about a default are growing. Speaker McCarthy added, that he has not had any separate conversations with President Biden since their third meeting.

This content was produced with the assistance of AI translation services.