U.S. Treasury Secretary Janet Yellen said on Wednesday that the Treasury Department will not prioritize payments on federal debt, saying any form of failure to pay is a default and “definitely” a recession. said he would pull the trigger on
“The failure of the United States to meet its obligations in any payment is a de facto default, whether to a bondholder, military or social security beneficiary,” Yellen told reporters in Dakar, Senegal. spoke to the group.
“Whether or not the United States honors its payment obligations is simply not something that can be negotiated in Congress,” Yellen said. “The U.S. Treasury system is designed to meet all payment obligations as they come due, not to prioritize some and defer some,” he said.
Some Republican lawmakers and analysts have suggested that some payments, such as interest payments on Treasury bonds, could be prioritized if needed when funds are about to run out. . The aim is to limit the damage to financial markets.
U.S. Debt Ceiling Hits Special Measures, Treasury to Avoid Default
In an interview with CNN International on Wednesday, Yellen said that payment defaults “will definitely push the U.S. economy into recession.” “Many workers will lose their jobs and their borrowing costs will surely rise,” he said.
That’s because a default would “at the very least” trigger a debt downgrade, Yellen said. He continued that the US solvency would be discredited by foreign governments and the dollar’s status as the world’s reserve currency would be threatened.
US President Biden said on the same day that he plans to discuss the debt ceiling with House Speaker McCarthy.
Original title:Yellen Warns of Recession as Inevitable If US Defaults on Debt(excerpt)
