Yellen Declares U.S. Default as Inconceivable

Treasury Secretary Janet Yellen firmly expressed her belief that the idea of US lawmakers allowing the nation to default on its debt should be completely unthinkable. This statement came during a press briefing before the G-7 finance ministers and central bank governors gatherings in Niigata, Japan. Yellen acknowledged the suggestion by former President Donald Trump for Republican lawmakers to consider the possibility of default, but she emphasized that defaulting on debt would have severe consequences for the US and global economies. She insisted that America should never default under any circumstances.

When questioned about potential actions the Biden administration could take following a default, Yellen stressed the necessity for lawmakers to raise the debt ceiling. She asserted that there is no favorable alternative solution to prevent a catastrophic outcome. Although she refrained from ranking the available options, she urged the quick passage of legislation to raise the debt ceiling in order to avoid the dire consequences associated with defaulting on debt. Yellen highlighted that default can be prevented, and generating a crisis of their own making is unnecessary.

“The US Congress has raised or suspended the debt limit almost 80 times since 1960. I urge it to act quickly to do so once again,” Yellen stated.

Yellen’s comments come in light of her prior warning of an “economic catastrophe” if the US fails to raise its debt ceiling within the next few weeks. She has already cautioned that the US could unexpectedly fall short in meeting its debt obligations, with potential exhaustion of measures as early as June 1. Reports in the media last week stated that Yellen’s trip to Japan would be shortened to ensure her continued involvement in addressing the debt ceiling issue. During the press briefing, she expressed optimism that the differences could be resolved before the next meeting and that the debt ceiling would be raised.