US will default if debt deal fails – treasury secretary

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America’s chances of paying its obligations beyond June 1 are “quite low,” US Treasury Secretary Janet Yellen cautioned in an appearance with NBC’s ‘Meet the Press’ on Sunday.

According to Yellen, if Congress fails to achieve a deal on raising the government’s $31.4 trillion borrowing ceiling by that time, the US will be compelled to default on “some bills” shortly after.

“There is always uncertainty about tax receipts and spending.” And so it’s difficult to be certain, but my estimate is that the chances of reaching June 15 while being able to pay all of our obligations are pretty low… “My assumption is that if the debt ceiling is not raised, there will be difficult choices about which bills go unpaid,” Yellen said.

The treasury secretary did not specify whose ‘bills’ she was referring to, but she did state that the government’s most pressing commitments range from paying interest on outstanding debt to “obligations to seniors who rely on social security, military, and contractors who have provided services to the government.”

“There can be no acceptable outcomes if the debt ceiling is not raised,” she continued.

The administration of US President Joe Biden and Republicans led by House Speaker Kevin McCarthy have been at odds for months over lifting the debt ceiling, despite warnings that the US could face its first-ever default if it is not lifted by June 1.

Republicans are refusing to support the measure unless Biden agrees to slash government spending and curtail social programs.

Some lawmakers have urged Biden to use his authority under the 14th Amendment to the Constitution to circumvent Congress and increase the debt ceiling unilaterally. However, Biden told reporters on Sunday that while he has contemplated doing so, there is likely not enough time before the deadline.

Biden and McCarthy are due to meet again on Monday to discuss the situation.