FirstFT: US faces ‘constitutional crisis’ over debt limit impasse, Yellen warns

US Treasury Secretary Janet Yellen warned of a “constitutional crisis” that risks economic and financial disaster if Congress does not increase the federal debt limit, with the government at risk of running out of cash in the absence of new borrowing capacity.

His comments came as President Joe Biden prepared to meet congressional leaders at the White House for talks to break the fiscal impasse over raising the debt ceiling, which Yellen said could be breached as early as June 1. .

“If Congress fails to meet its responsibilities, there are simply no good options,” he said in an interview with ABC. This week Sunday. Biden administration officials have considered invoking the 14th Amendment to the US Constitution to continue issuing new debt to pay Social Security recipients, bondholders, government employees and others without legislative approval.

A clause of the amendment states that “the validity of the public debt of the United States, authorized by law, including debts incurred for the payment of pensions and rewards for services in suppressing insurrection or rebellion, shall not be discussion”. Economists and constitutional experts are divided on whether evading Congress in this way is legal.

The United States “should not get to the point where we have to consider whether the president can continue to issue debt. This would be a constitutional crisis,” Yellen said.

Asked if Biden would invoke the 14th amendment, Yellen said she didn’t want to consider contingency options yet, but using the clause would be “among the bad options.” Raising the debt ceiling was the job of Congress, she added.

Here’s what else I’m keeping an eye out for:

• WTO: The May meeting of the General Council of the World Trade Organization begins in Geneva.

• Germany: Europe’s economic powerhouse publishes data on industrial production for March.

• UK: The financial markets are closed for a public holiday following the coronation of King Charles III over the weekend.

Five more top stories

1. The price cap on Russian oil exports has forced the Kremlin to increase the tax burden on producers, further undermining an energy sector already reeling under pressure from Western sanctions, G7-led coalition officials told the FT.

2. The slow rebound in China has dragged down the profits of Western companiesafter the sudden reopening of the country from the brakes of the pandemic overly optimistic growth forecasts.

3. Fears about nuclear safety in Ukraine have increased after Russia began the evacuation of hundreds of civilians from occupied areas in southeast Ukraine, including families with children from a city hosting workers at Europe’s largest nuclear power plant.

4. Anheuser-Busch InBev boss blamed social media and misinformation for fueling a conservative boycott of Bud Light after America’s best-selling beer was promoted by a transgender influencer. The boycott led to beer sales volumes falling by a quarter.

5. Arab states have agreed to readmit Syria to the Arab League more than a decade after its membership was suspended following that of President Bashar al-Assad brutal crackdown on a popular uprising.

The big read

ExxonMobil, the energy major most dedicated to oil production, appears to be turning a new green leaf, making new clean energy commitments and reorganizing internally under pressure from activist shareholders. But few outside Exxon believe it is truly transforming its business, and its feints toward a green transition illustrate the range of pressures facing American oil companies.

We are also reading. . .

Chart of the day

A two-year rally in US oil and gas inventories is coming to stop as falling crude prices and fears of a slowdown in the world’s largest economy threaten producers’ ability to maintain huge shareholder payments.

Hear Hillary Clinton live in conversation with FT US National Editor Edward Luce on May 20 at our FTWeekend Festival. Register Now And Get $20 Off As A Newsletter Subscriber With Promo Code NewslettersxFestival At ft.com/festival-us.

Take a break from the news

Take a tour of four major hotels which have benefited from a “glow up” and much appreciated restyling. From Santa Monica in California to Portofino on the Italian Riviera, what’s old is new again.

Additional contributions by Gary Jones e Years Jonas