from Birch Gold Group:
From Peter Reagan at Birch Gold Group
Treasury Secretary Janet Yellen usually gets a good deal of media attention whenever the dramatic topic of resolving the “debt ceiling” comes up.
This week is no exception. Yellen warned, yet again, that severe economic consequences were imminent if the U.S. were suddenly not able to pay its bills:
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“Our current projection is that in early June, a day will come when we’re unable to pay our bills unless Congress raises the debt ceiling, and it’s something I strongly urge Congress to do,” Yellen told ABC’s “This Week.”
Yellen said the U.S. has already been using “extraordinary measures” to avoid default, and it’s not something the Treasury Department can continue to do. She said Congress needs to take action to avoid “economic calamity.”
“It’s widely agreed that financial and economic chaos will ensue,” Yellen said.
In fact, Treasury Secretary Yellen is panicking over the June deadline. Now she is personally dialing an unknown list of financial-sector executives to warn them.
Looks like the Biden administration is seeking to pressure GOP lawmakers into raising the debt ceiling while leaving Biden’s apparent blank check for spending intact:
The Treasury secretary is having one-on-one conversations with individual CEOs to warn them about the “dangerous consequences of the current brinkmanship,” one of the sources said.
The sources declined to name the CEOs with whom Yellen had spoken in recent days, or provide any other details about their conversations, but one said they included executives in the financial sector and broader economy.
While the sources did not spell out her purpose, Biden administration officials have been speaking to business owners about pressuring Republicans to raise the debt ceiling without conditions. [emphasis added]
In fact, the Treasury Secretary also disapproves of any spending cuts at all while Congress attempts to resolve the debt ceiling fiasco.
Yellen scorns fiscal discipline, calls spending cuts “irresponsible”
Yellen recently scolded the GOP for trying to negotiate a pause in spending while resolving the debt ceiling:
Treasury Secretary Janet Yellen said in an interview published Sunday that Republican calls for spending cuts in exchange for agreeing to raise the debt ceiling were “very irresponsible.”
Yellen said the GOP’s stance on the debt ceiling could have far-reaching consequences for the economy.
She also warned: “It is possible for markets to become quite concerned about whether or not the U.S. will pay its bills.”
The article offered a counterpoint explaining the GOP’s reasoning, and one consequence of delaying a debt ceiling decision:
The Biden administration has warned that an extended standoff over the debt ceiling could destroy faith in the credit of the U.S. government and spur a deep economic recession.
Of course, we don’t know exactly how this political drama will play out. We’ll have to wait and see what happens. But it looks like there will be consequences if some form of resolution isn’t reached soon.
