Yellen speaks of “very adverse consequences” if the roof is not raised in the US

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US Treasury Secretary Janet Yellen warned on Wednesday of the risk of “highly adverse” consequences if Congress and the White House fail to reach an agreement to raise the federal government’s debt ceiling.

During an interview at the Wall Street JournalThe official said that he already sees stress in the financial markets due to stagnation, including in the auction of securities (bills).

Yellen said the government would face “very difficult decisions” about its payments if the debt ceiling was not raised. Previously, he had informed in a letter that the lack of resources “probably” would occur as of June 1. This Wednesday, Yellen said that the Treasury is working to update Congress on the date soon, seeking to make it more precise. In any case, he reaffirmed that it is “highly probable” that the problem of lack of resources will present itself early next month.

According to Yellen, the government’s initial proposal was to reduce the deficit by US$3 trillion in ten years. In negotiations with the Republican opposition, President Joe Biden has proposed an additional $1 trillion deficit cut, he noted. He added that there is an experienced team of negotiators dealing with the issue.

Yellen also said that the commitment of the government and the opposition so that the country does not go into default is “very important.” This also helps protect the dollar and Treasuries, she said. Asked about the preparations for a possible default, the official said that the Treasury is not involved in these talks, but rather in seeking to circumvent the problem.

The Treasury secretary said that fiscal responsibility is “extremely important” and that the direction of fiscal policy could be discussed. According to her, the Biden government has shown this approach. The point of raising the debt ceiling, Yellen reinforced, is to pay off debts already approved by Congress, without creating new debt.

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