Yellen says ‘hard selections’ will have to be made if debt ceiling just isn’t raised

Treasury Secretary Janet Yellen said Sunday that “hard selections” will have to be made about which bills will go unpaid if the debt ceiling just isn’t raised.

Yellen reaffirmed her warning that america could default on its debt as early as June 1, which she has said could cause widespread “economic chaos.” There will likely be no good outcomes if Congress fails to take motion, she said.

“We’re focused on raising the debt ceiling, and there will likely be hard selections if that does not occur,” she told NBC’s “Meet the Press.” “There could be no acceptable outcomes if the debt ceiling is not raised, no matter what decisions we make.”

Lifting the debt ceiling is mandatory for the federal government to cover spending commitments already approved by Congress and the president with a view to prevent default. Raising the debt ceiling doesn’t authorize latest spending, but House Republicans have said they’ll not lift the limit if Biden and lawmakers don’t conform to future spending cuts.

Consequently, the on-again, off-again deliberations on Capitol Hill have been tense.

President Joe Biden said Sunday that Republicans “must move from their extreme position” during a press conference ahead of his departure from the Group of Seven Summit in Japan. After negotiations stalled late Saturday, Biden said he planned to call House Speaker Kevin McCarthy, R-Calif., on his way back to Washington.

“It is time for Republicans to just accept that there isn’t any bipartisan deal to be made solely, solely, on their partisan terms,” Biden said.

McCarthy told reporters on Saturday that the White House had “moved backwards,” adding that he didn’t think negotiations would give you the option to maneuver forward until Biden returned to the U.S.

On the Independent Community Bankers of America Capital Summit Tuesday, Yellen said the White House Council of Economic Advisers found that a default could lead on to an economic downturn as bad because the Great Recession, with 8 million Americans losing their jobs and the stock market’s value falling by about 45%.

She also noted a Moody’s Analytics report which found similar numbers with greater than 7 million Americans out of labor and $10 trillion in household wealth evaporated. Yellen also warned that a debt ceiling breach could affect essential government services.

Biden said Sunday he thinks an agreement could be reached with Republicans, but that it just isn’t certain.

“I am unable to guarantee that they would not force a default by doing something outrageous,” he said.