Director of National Intelligence (DNI) Avril Haines testifies during a Senate Armed Services Committee hearing on “Worldwide Threats” on the U.S. Capitol in Washington May 10, 2022.
Kevin Lamarque | Reuters
WASHINGTON — The director of America’s top spy agency warned lawmakers Thursday that Russia and China will benefit from the U.S. potentially defaulting on its debt, which the Treasury Department says could occur as early as June 1.
“It could be almost a certainty that they’d look to benefit from the chance,” U.S. Director of National Intelligence Avril Haines said before the Senate Intelligence Committee when asked concerning the national security consequences of the U.S. teetering on the sting of a fiscal cliff.
Haines, who leads America’s 18 intelligence agencies, said that Russia and China would attempt to spotlight “the chaos inside america, that we’re not able to functioning as a democracy.”
“Almost actually it might create global uncertainty concerning the value of the U.S. dollar and U.S. institutions and leadership, resulting in volatility in currency and financial markets and commodity markets which are priced in dollars,” she said.
Haines added that she will not be following each development regarding debt limit negotiations on Capitol Hill.
The debt ceiling, which was first put in place by Congress during World War I, is the limit on the sum of money the federal government can borrow to pay for defense expenditures in addition to mandatory programs, equivalent to social security and Medicaid.
In January, Treasury Secretary Janet Yellen notified Congress that the U.S. government began to make use of extraordinary measures to fend off default.
“Failure to satisfy the federal government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability,” Yellen wrote in a Jan. 13 letter. “I respectfully urge Congress to act promptly to guard the total faith and credit of america.”
Since 1960, Congress has raised the debt ceiling 78 separate times under each Republican and Democratic presidents.
Read more: What’s the debt ceiling? Why it’s necessary and the way it affects you
Shalanda Young, the director of the Office of Management and Budget, echoed Haines’ concerns when asked on the White House whether foreign adversaries would profit from a U.S. default.
“They love this. They like to see chaos within the American system. They like to see that we won’t do our basic jobs,” Young told reporters during a press briefing on the White House. “The underside line here, Congress must act. Stopping default is their basic constitutional responsibility and so they must get it done,” she said.
Read more: Democrats quietly pave the best way for a debt ceiling deal
In February, former Secretaries of Defense Leon Panetta and Chuck Hagel warned that the federal government defaulting on its bills, a historic first, will weaken America’s national security.
“The consequence of debt-ceiling brinksmanship is a dangerous self-inflected wound that tells each our friends and our enemies that we can’t be trusted. Such brinksmanship weakens our national security,” the previous Pentagon chiefs wrote in a letter.
The previous secretaries added that Russian President Vladimir Putin “can be watching to measure the credibility of U.S. economic power” while Washington leads efforts to offer Kyiv with security assistance and coordinate global sanctions on Moscow.
“To default on our financial obligations at the moment would each undermine our own power and encourage Putin to proceed his futile war on democracy,” Panetta and Hagel said.
What’s more, a default would also impact the U.S. governments’ ability to pay the three.4 million men and girls within the sister service branches, National Guard and civilian employees that make up the Defense Department.