The United States is "highly likely" to default on government obligations by early June and potentially as early as June 1 if the Congress fails to raise or suspend the debt limit, said U.S. Treasury Secretary Janet Yellen in an update letter to congressional leaders on Monday.
Yellen gave a similar estimate in another letter one week ago.
Waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States, warned Yellen.
"In fact, we have already seen Treasury's borrowing costs increase substantially for securities maturing in early June," added Yellen.
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- US President Joe Biden said that talks with US House Speaker Kevin McCarthy on raising the national debt ceiling were productive, with discussions to continue despite ‘areas of disagreement’.
"I just concluded a productive meeting with [House] Speaker [Kevin] McCarthy about the need to prevent default and avoid a catastrophe for our economy. We reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement," the US president said in a statement.
Biden pointed out that "while there are areas of disagreement, the Speaker and I, and his lead negotiators Chairman McHenry and Congressman Graves, and our staffs will continue to discuss the path forward."
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President Joe Biden and House Speaker Kevin McCarthy could not reach an agreement Monday on how to raise the U.S. government's $31.4 trillion debt ceiling with just 10 days before a possible default that could sink the U.S. economy, but vowed to keep talking.
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