NEW YORK – 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 US Treasury Secretary Janet Yellen in an update letter to congressional leaders on Monday, reported Xinhua.
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.
US President Joe Biden and House Speaker Kevin McCarthy are set to meet again on the matter late Monday.
The United States hit its US$31.4 trillion debt limit in January and the Department of Treasury employed accounting manoeuvres known as “extraordinary measures” to keep the government paying its bills so far.
Meanwhile, the United States defaulting on its financial obligations by not raising the debt ceiling could prove catastrophic for its military services, US Navy Chief of Naval Operations Michael Gilday said during a Council on Foreign Relations panel discussion, according to Sputnik.
“I think that the potential here could be catastrophic for us, and I don’t say that lightly,” Gilday said on Monday, when asked about the impact on the US military of a potential default.
A default would have an “immediate and dramatic impact” on the readiness of the services, US Coast Guard Commandant Linda Fagan said during the panel discussion. – Bernama
