June 6, 2023

By Andrea Shalal

NIIGATA, Japan (Reuters) – Treasury Secretary Janet Yellen on Saturday called the confrontation over raising the US debt ceiling “more difficult” than in the past, but said she remained hopeful a solution could be found to make a first-ever prevent US default

Yellen told Reuters in an interview on the sidelines of a meeting of Group of Seven finance officials in Japan that she hoped to notify the US Congress in a few weeks when exactly the Treasury would run out of money to pay the bills. to be paid by the government.

She has repeatedly called on Congress to agree to raise the $31.4 trillion limit on federal loans to avoid the “economic and financial catastrophe” that would follow if the United States defaulted on its debts.

Last week, she told lawmakers that the Treasury could run out of money to pay all of the government’s bills as early as June 1 — and likely early June — unless Congress raises the debt limit. She did not offer an update on Saturday.

President Joe Biden, a Democrat, insists Congress has a constitutional duty to raise the cap without conditions to fund previously approved spending. Republicans, who control the House of Representatives, have tied their agreement to raise the ceiling to sweeping budget cuts.

Unlike most developed countries, the US sets a ceiling on how much it can borrow. Because the government spends more than it takes in, legislators must raise that limit periodically.

Yellen said the first major debt-ceiling stalemate since 2011 reflected continued US polarization following Donald Trump’s presidency and raised concerns about US relations and global prestige.

“It’s certainly not positive for relationships and global prestige and credibility,” she said. “Maybe this time is more difficult, but I am hopeful that this one will end the same way as others, which is that we will find a solution. We are focused on that.”

Yellen said it was a positive sign that “virtually everyone” who attended a meeting Biden hosted with congressional leaders on Tuesday agreed that defaulting on the United States would be unacceptable.

She said Biden planned to attend the G7 summit starting Friday in Hiroshima and considered it a priority, but noted that he said he could cancel the trip if sufficient progress was not made in ending the the deadlock of the debt ceiling.

Despite concerns about the fight against the debt ceiling, Yellen said she remained convinced that the Biden administration had restored US leadership in the world and that other G7 leaders were grateful they had “turned the dial 180 degrees from the Trump administration”.

(Reporting by Andrea Shalal in Niigata; Editing by William Mallard)