By Andrea Shalal
NIIGATA, Japan (Reuters) -Treasury Secretary Janet Yellen said there was still uncertainty about exactly when Treasury would run out of cash to pay U.S. government debts, but she would keep Congress apprised of any change in the date, which could come as early as June 1.
Speaking on the sidelines of Group of Seven (G7) finance officials meeting in Japan, Yellen told Bloomberg TV that the Biden administration was working around the clock to avert the economic upheaval that would be triggered if Congress failed to raise the $31.4 trillion debt limit.
She said she had discussed the issue with business leaders in recent weeks and would meet next week with senior Wall Street bankers about the possibility that Washington could default on its debt for the first time since 1789.
“Our focus is on making sure that Congress does raise the debt ceiling. I feel that’s something we’re going to succeed in doing, and we’re working hard to make sure that that gets done.”
She viewed it as appropriate for Wall Street leaders and business owners to speak out about how the debate over the debt limit was affecting the U.S. economy and the global economy, causing “a grave level of uncertainty”.
World Bank President David Malpass told Reuters the risk of a U.S. default was adding to problems facing the slowing global economy, with rising interest rates and high debt levels choking back investments needed to fuel higher output.
“Clearly, distress in the world’s biggest economy would be negative for everyone,” he said on the sidelines of the G7 meeting. “The repercussions would be bad to not get it done.”
Yellen last week told lawmakers that Treasury could run out of money to pay all the government’s bills as early as June 1.
President Joe Biden’s Democrats and the Republicans, who control the U.S. House of Representatives, remain at odds over the need to raise the debt limit, which reflects previously spent federal money.
Biden says Congress has a constitutional duty to raise the ceiling without conditions, while Republicans have tied their agreement to increase the cap to sweeping budget cuts.
Unlike most developed countries, the U.S. sets a ceiling on how much it can borrow. Because the government spends more than it takes in, lawmakers must periodically raise that cap.
Yellen dodged a question on whether Treasury would keep making payments on securities if the debt ceiling was breached – a possibility raised during an earlier debt ceiling debate. She said there was no good option other than for Congress to raise the debt limit, as it has done nearly 80 times since 1960.
“We’ve not discussed what to do if that doesn’t occur with the president. Our focus is getting it done,” she said.
Yellen said Treasury might be able to provide more refined guidance on exactly when it would run out of cash to pay the government’s bills as the date neared.
German Finance Minister Christian Lindner said on Friday he hoped U.S. politicians would come to a “grown-up” decision to raise the federal debt ceiling, warning there was a risk to the global economy if they did not.
(Reporting by Andrea Shalal; editing by Toby Chopra, Alex Richardson and Mark Heinrich)