Janet Yellen, US Treasury secretary, during a news conference at the Group of Seven (G-7) finance ministers and central bank governors meeting in Niigata, Japan, on Thursday, May 11, 2023.
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Treasury Secretary Janet Yellen said the idea of U.S. lawmakers letting the nation default on its debt should be “unthinkable.”
Speaking to reporters ahead of the G-7 finance ministers and central bank governors meetings in Niigata, Japan, Yellen said she was aware of former President Donald Trump’s suggestion for Republican lawmakers to let the nation default.
“The notion of defaulting on our debt is something that would so badly undermine the U.S. and global economy that I think it should be regarded by everyone as unthinkable,” she told reporters. “America should never default.”
When asked about steps the Biden administration could take in the wake of a default, Yellen emphasized that lawmakers must raise the debt ceiling.
“There is no good alternative that will save us from catastrophe. I don’t want to get into ranking which bad alternative is better than others, but the only reasonable thing is to raise the debt ceiling and to avoid the dreadful consequences that will come,” she told reporters, noting that defaulting on debt can be prevented.
“There is no good reason to generate a good crisis of our own making. The U.S. Congress has raised or suspended the debt limit almost 80 times since 1960. I urge it to act quickly to do so once again,” she said.
Yellen’s comments come after she warned of an “economic catastrophe” if the U.S. fails to raise its debt ceiling in the coming weeks. She has also previously warned that the U.S. could fail to meet its debt obligations sooner than expected – and it may run out of measures as early as June 1.
Media reports last week cited a Treasury official who said her trip to Japan will be cut short to make sure she can continue taking part in efforts to address the debt ceiling issue.
She told journalists on Thursday, “Another meeting is scheduled for next Friday and staff ar working to see if they can resolve this, so I’m very hopeful the differences can be bridged and the debt ceiling will be raised.”