Treasury Secretary Yellen Insists US Could Default on June 1 – During her appearance on NBC’s “Meet the Press”, U.S. Treasury Secretary Janet Yellen emphasized that June 1 is a firm deadline for the U.S. to potentially default on its debt obligations. She highlighted the seriousness of the situation. Meanwhile, global investment bank Goldman Sachs has provided an alternative perspective, suggesting that the “real deadline” for a potential U.S. default is more likely to fall around June 8-9.
Responding to a question about the June 1 deadline for a possible U.S. default, she said: “I indicated in my last letter to Congress that we expect to be unable to pay all of our bills in early June and possibly as soon as June 1. And I will continue to update Congress, but I certainly haven’t changed my assessment. So I think that’s a hard deadline.” However, the U.S. government is expecting some tax payments on June 15 which would provide some revenue.
When asked about the likelihood the U.S. could get to June 15 “to avoid breaching the debt ceiling,” Yellen said: “There’s always uncertainty about tax receipts and spending. And so it’s hard to be absolutely certain about this, but my assessment is that the odds of reaching June 15th, while being able to pay all of our bills, is quite low.”
Commenting on “extraordinary measures” that President Joe Biden could take to resolve the debt ceiling issue in Congress, Yellen said: “There has been much discussion of the 14th Amendment. And, as President Biden said, it doesn’t seem like something that could be appropriately used in these circumstances, given the legal uncertainty around it, and given the tight time frame we’re on. So my devout hope is that Congress will raise the debt ceiling.”
Yellen noted: “My assumption is that if the debt ceiling isn’t raised, there will be hard choices to make about what bills go unpaid.” Goldman Sachs, the global investment bank, forecasts that the United States may potentially default on its debt obligations around one week following June 1. Alec Phillips, Goldman Sachs’ chief political economist, told Bloomberg TV on Friday: “The reality is that Congress has to do this at some point very soon, and they should just go ahead and do it.”
“So waiting for the last minute isn’t necessarily the right move, even though we think that maybe they could go a little bit longer.” The Goldman Sachs economist shared: “Our guess right now is that the real deadline is probably more like June 8th, 9th, that’s when they’re at sort of greatest risk.”
According to a recent report by the Congressional Budget Office (CBO), there is a notable likelihood of the United States defaulting on its debt obligations within the initial two weeks of June. Numerous individuals have raised concerns about the potential catastrophic outcomes associated with a U.S. default, such as a worldwide financial crisis.
Executives in key positions from 146 prominent U.S. companies have urgently appealed to President Biden and congressional leaders, emphasizing the need for swift action to avert a U.S. default and cautioning against the potential “disastrous consequences.” Additionally, some experts express apprehension that a U.S. default could endanger the reserve currency status of the dollar.