WASHINGTON (Pakistan Point News / Sputnik - 24th June, 2021) Congress would do well to raise the US debt ceiling ahead of the July 31 deadline as a default on the United States' debt would be unthinkable, Treasury Secretary Janet Yellen said during a congressional budget hearing.
"Failing to increase the debt limit would have absolutely catastrophic economic consequences," Yellen said on Wednesday. "It would be utterly unprecedented in American history for the United States government to default on its obligations."
Yellen said failure by Congress to act would precipitate a financial crisis that would threaten the jobs and savings of Americans, particularly at a time when the economy is still recovering from the coronavirus pandemic.
"Defaulting on the national debt should be regarded as unthinkable," she added.
Yellen's remarks came after some Republican lawmakers warned they will not support a suspension of the debt ceiling unless the Biden administration agreed to cut spending or take other debt reduction measures. Senate Republican leaders said there will not be enough votes in the chamber to pass a "clean" debt ceiling increase, setting President Joe Biden up for a potentially disastrous outcome.
Yellen warned the economic impact of the coronavirus pandemic restrictive measures has limited the Treasury Department's ability to know how long it can avert a default.
"We can't tolerate any chance of defaulting on the government debt, and there is a lot of uncertainty. It's possible that we could reach that point," Yellen said, adding that there could be overruns by as early as August.
