Treasury Secretary Janet Yellen warned on Tuesday that a default on the national debt would leave millions of Americans without income and trigger a recession, leading to major job cuts and business closures.
Addressing the banking sector, Yellen noted that the unprecedented economic and financial crisis could be aggravated by disruptions in the work of structures subordinate to the federal government. According to her, we can talk about areas such as aviation, law enforcement, border guards and defense, as well as telecommunications systems.
The head of the Ministry of Finance pointed out that the accompanying financial crisis could significantly increase the consequences of disruptions in the economy.
“It is quite possible that we will see a number of financial markets collapse: a global panic will require (…) additional funds, will lead to a massive withdrawal of money and will also cause a sale of assets,” she explained. .
On Monday, Yellen pointed out in a speech to Congress that without raising the debt ceiling, the Treasury Department will only be able to pay government bills until June 1.
Failure to reach an agreement on raising the debt ceiling would have serious economic and financial consequences, she said.
“Our economy is suddenly going to find itself in the middle of an unprecedented economic and financial storm,” Yellen said, adding that 66 million Social Security recipients and millions of veterans and military families are at risk of finding themselves without payment.
“The resulting revenue impact could lead to a recession that will destroy many jobs and businesses in the United States,” the secretary added.
Yellen said the confrontation over the federal debt ceiling is already driving up borrowing costs and increasing the country’s debt burden today, and urged Congress to avoid the “eleven-hour deadlock” over the debt ceiling, as happened in 2011, leading to the first ever drop. American credit rating.
” Hurry up. Every day of Congressional inaction leads to increased economic costs that can slow the development of the US economy,” Yellen said.
“The American economy is hanging by a thread. The livelihoods of millions of Americans too. There’s no time to lose. Congress should resolve the issue of the national debt limit as soon as possible,” the finance ministry chief said.
Recall that President Joe Biden is meeting with House Speaker McCarthy and other congressional leaders on Tuesday to develop an action plan.
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