Treasury Secretary Janet Yellen has warned that there are “no good options” for the United States to avoid an economic “calamity” if Congress fails to raise the nation's borrowing limit of $31.381 trillion in the coming weeks. She did not rule out President Joe Biden bypassing lawmakers and acting on his own to try to avert a first-ever federal default.
The U.S. Treasury Department may run out of measures to pay its debt obligations by June, according to Yellen. The U.S has already been using "extraordinary measures" to avoid default, and Congress needs urgent action so as not plunge the country into "economic chaos." On Monday, President Joe Biden called the "big four" congressional leaders - Chuck Schumer, Mitch McConnell, Nancy Pelosi and Kevin McCarthy - inviting them for a May 9 meeting at the White House discussing this pressing issue.
Democrats and Republicans are at loggerheads over whether raising the debt ceiling should even be subject to negotiation. Yellen's comments add even more urgency to these high-stakes meetings between Biden and congressional leaders from both parties. An increase in the debt ceiling would not authorize new federal spending but would only allow borrowing necessary for paying what Congress has already approved.
Arizona Sen. Kyrsten Sinema encouraged both sides, particularly Biden and McCarthy, urging them towards compromise while acknowledging their differing opinions on handling government funds responsibly. Sen James Lankford (R-Okla.) agreed about potential risks associated with invoking Section Four of 14th Amendment; he stated it is very clear that decisions surrounding government spending must initially pass through Congress before any executive-action can occur
On Sunday, Treasury Secretary Janet Yellen urged congressional Republicans drop their demands requiring President Biden cut back on federal expenses before agreeing upon increasing America’s national-debt threshold prior reaching an approximate deadline set June 1st regarding potential default risks. The Treasury Department revealed that the government has already hit current debt limit of $31.4 trillion while undertaking complex financial maneuvers so as not to borrow even more money.
The Biden administration has left open the possibility for a two-track negotiation, whereby House Republicans extract reductions in federal spending and Biden sees the debt ceiling raised, without acknowledging their actions as quid pro quo. Yellen did not rule out any unprecedented measures taken by the administration in avoidance of possible default scenarios affecting America's economy at large