US default risk, Yellen: “They could declare it from June 1”

Last week’s debt limit negotiations prompted dire warnings about what would happen if the federal government failed to meet its obligations

The US government could run out of money and there is a risk of default on June 1 if the debt ceiling is not raised. This was stated by Treasury Secretary Janet Yellen, underlining that waiting until the last minute to act could have serious consequences on business and consumer confidence. In a new letter to the congressional leadership, published May 15, Yellen said she would update lawmakers again on the deadline next week. “We still estimate that the Treasury will likely no longer be able to meet all government obligations unless Congress takes action to raise or suspend the debt limit by early June, and potentially as early as June 1,” he said. the head of the US Treasury.

The debt limit was reached in January

Since reaching its debt limit in January, the Treasury has relied on accounting maneuvers called extraordinary measures to pay the country’s bills. Biden and the Speaker of the House, Kevin McCarthy, are trying to find a compromise on the issue. The Wall Street Journal wrote that Republicans are pushing for any increase in the debt limit to be accompanied by, among other measures, federal spending cuts. Democrats, for their part, are insisting that Congress raise the debt limit without attaching other policy changes. The markets reflect the danger of default. Credit default swaps currently exceed the 2011 levels seen when government debt was downgraded.