House Republican Majority Leader Steve Scales asked for more data to confirm the US Treasury’s signal that the country could default as early as June if the debt ceiling is reached. According to him, it can be postponed, and therefore the agreement in negotiations with the US government is not in a hurry. Some Republicans are even proposing to freeze government payments before authorizing additional borrowing if the Treasury Department runs out of money that could be freed up through emergency measures, reports say. bloomberg.
On the other hand, the bipartisan Congressional Budget Office and Policy Center believe in Yellen’s statement and share the Treasury Department’s concerns, highlighting the risk of a payment delay in the first two weeks of June without a debt agreement.
But many Republicans question the urgency of the situation. That sentiment is a concern about the ongoing negotiations between House Republicans and the Biden administration, as representatives from both sides continue to negotiate.
Representative Chip Roy described the hypothetical warnings as a “manufactured crisis” designed to pressure Republicans to back down from their demands. He insisted that the government would have sufficient liquidity in June and dismissed the possibility of a debt default. Other conservatives, including Matt Gaetz, have questioned Yellen’s choice of June 1 as Date X and have sarcastically suggested she consider a fortune teller.
House Minority Leader Kevin McCarthy reiterated concerns about unsustainable government spending, stressing that rather than focusing on deadlines, there is a need to contain costs. McCarthy did not comment when asked if he thought June 1 was the actual deadline.
The White House has been stressing the urgency of extending the debt limit for weeks, and President Biden has canceled international flights to prioritize negotiations. But House Republicans remain skeptical.
The true consequences of a possible default on the global economy have yet to be tested, but major banks and financial institutions are already preparing contingency plans. Yellen didn’t provide specifics about how the Treasury would act in the event of insufficient funds, saying only that tough decisions would have to be made.
Cover image: Getty Images.
