Yellen: We must raise debt ceiling to avoid disaster

US Treasury Secretary Janet Yellen emphasized that the US would not be able to pay its “bills” if Congress does not raise the debt limit and said, “We need to raise the debt limit to avoid economic disaster.” Yellen made evaluations on the economic agenda in an interview with ABC News. Pointing out that the US could face a cash shortage as early June, Yellen said that there was a lot of uncertainty and that she planned to inform Congress as new information was obtained. Stating that they had been implementing extraordinary measures for the last few months, Yellen stated that their ability to implement these measures was exhausted and that the country would begin to run out of cash. “Negotiations should not be conducted by holding a gun to the head of the American people” Drawing attention to the fact that the US would not be able to pay its “bills” if Congress does not raise the debt limit, Yellen said, “We need to raise the debt limit to avoid economic disaster.” Yellen warned that if the debt limit was not raised, the US would be unable to make its due payments for the first time in its history. Noting that US President Joe Biden invited congressional leaders to the White House and wanted to create a process to negotiate budget spending priorities and levels, Yellen said, “However, these negotiations should not be conducted by holding a gun to the head of the American people.” Yellen noted that “there is no option” other than Congress increasing the debt limit. “I have confidence in the overall strength of the banking system” Also touching on the developments in the banking sector, Yellen said, “I believe that our banking system has strong capital levels and access to liquidity.” Reminding that they are taking decisive steps to ensure that the problems in a few banks do not spread, Yellen emphasized that they are ready to use the tools they have used before again if necessary. Stating that banks have access to liquidity and are well capitalized, Yellen said, “I have confidence in the overall strength of the banking system.” Debt limit impasse The federal government in the US has reached a debt limit of $ 31.4 trillion, which could lead to default. The debt limit, or debt ceiling, means "an upper limit on the amount of money the U.S. government can borrow to pay its debts." Republicans, who hold the majority in the House of Representatives, are in favor of significant spending cuts in debt limit negotiations. Democrats, on the other hand, insist on increasing the debt limit and are rejecting Republicans' proposals to cut certain spending. There is concern that the debt limit issue, which has become an impasse between Democrats and Republicans, will shake the markets. As recession expectations increase in the U.S., the showdown between the two parties over the debt limit carries more risk than ever. Biden will discuss the debt limit with congressional leaders on May 9 US House Speaker Kevin McCarthy introduced a bill that would increase the debt limit by $1.5 trillion in April. The US House of Representatives approved the bill presented by Republicans, which would increase the debt limit and make cuts in public spending, at the end of April. The bill, which has no chance of passing in the Democrat-controlled Senate, was seen as a step for Republicans to start negotiations with President Biden on the debt limit. Biden is expected to meet with House Speaker McCarthy, Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell at the White House on May 9 to begin negotiations on the debt limit.