{"id":117052,"date":"2021-06-24T00:53:50","date_gmt":"2021-06-24T00:53:50","guid":{"rendered":"https:\/\/fin2me.com\/?p=117052"},"modified":"2021-06-24T00:53:50","modified_gmt":"2021-06-24T00:53:50","slug":"yellen-warns-congress-of-unthinkable-u-s-default-risk-without-debt-limit-hike","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/yellen-warns-congress-of-unthinkable-u-s-default-risk-without-debt-limit-hike\/","title":{"rendered":"Yellen warns Congress of 'unthinkable' U.S. default risk without debt limit hike"},"content":{"rendered":"

WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen on Wednesday warned Congress that the United States risks a debt default and a new financial crisis as soon as the August recess if lawmakers fail to act quickly to suspend or raise the federal borrowing limit.<\/p>

U.S. Treasury Secretary Janet Yellen testifies before the Senate Appropriations Subcommittee on Financial Services about the FY22 Treasury budget request on Capitol Hill, in Washington, DC, U.S., June 23, 2021. Shawn Thew\/Pool via REUTERS<\/figcaption>

In testimony to a Senate Appropriations subcommittee, Yellen said defaulting on U.S. debt obligations would be \u201cunthinkable\u201d and \u201cwould have absolutely catastrophic economic consequences.\u201d<\/p>\n

Yellen said that to avoid uncertainty for financial markets, Congress should pass new debt limit legislation – allowing the Treasury to continue borrowing – before the latest suspension expires on July 31.<\/p>\n

An unprecedented default on U.S. government debt obligations \u201cwould precipitate a financial crisis, it would threaten the jobs and savings of Americans at a time when we\u2019re still recovering from the COVID pandemic,\u201d Yellen said.<\/p>\n

\u201cI would plead with Congress to simply protect the full faith and credit of the United States by acting to raise or suspend the debt limit as soon as possible.\u201d<\/p>\n

The Treasury in the past has been able to stave off potential default for several months by employing extraordinary cash-flow management measures such as suspending contributions to government employee pension funds.<\/p>\n

Asked how long these measures could last to allow the government to continue borrowing, Yellen said it was difficult to estimate that because spending on COVID-19 relief programs has added more uncertainty to Treasury\u2019s payment flows.<\/p>\n

\u201cWe can\u2019t tolerate any chance of defaulting on the government debt, and there is a lot of uncertainty. It\u2019s possible that we could reach that point while Congress is out in August, and I would really urge prompt action on raising the limit or suspending it,\u201d Yellen said.<\/p>\n

According to Senate and House of Representatives legislative calendars, the August recess will run from Aug. 9 to Sept. 10 in the Senate here and July 30 to Sept. 19 in the House here, with committee work scheduled on several days in early September.<\/p>\n

If the debt limit prevents Treasury from new borrowing, the government would have to rely only tax receipts to pay obligations, eventually making it impossible to make some debt repayments.<\/p>\n

SEEKING G20 ENDORSEMENT<\/h2>\n

Yellen told the hearing on the Treasury\u2019s fiscal 2022 budget proposal that Biden administration is hoping to the G20 finance ministers\u2019 endorsement for \u201cthe core elements\u201d of its international corporate tax proposals at a meeting next month in Venice, including a global minimum corporate tax.<\/p>\n

She said the Treasury was working towards an agreement at the G20 meeting that is similar to the G7 wealthy democracies\u2019 endorsement of the U.S. proposal for a 15% corporate minimum tax and a new method of local-market taxation for the largest and most profitable multinational corporations.<\/p>\n

Her comments on the G20 meeting followed a Reuters report on Tuesday that a draft communique being circulated ahead of the July 9-10 gathering indicated the finance leaders would endorse a global minimum tax, although it made no reference to a specific rate.<\/p>\n

The Biden administration is seeking a global minimum tax of at least 15%.<\/p>\n

Yellen also sparred with Republican senators over inflation concerns, sticking to her line that recent spikes in inflation data reflect transitory phenomena, including \u201csupply bottlenecks\u201d in the economy.<\/p>\n

She added that most measures of inflation expectations remained well anchored, with those exceeding a year out are stable, at around the Federal Reserve\u2019s 2% target.<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen on Wednesday warned Congress that the United States risks a debt default and a new financial crisis as […]<\/p>\n","protected":false},"author":3,"featured_media":117051,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"\nYellen warns Congress of 'unthinkable' U.S. default risk without debt limit hike - Fin2me<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fin2me.com\/markets\/yellen-warns-congress-of-unthinkable-u-s-default-risk-without-debt-limit-hike\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Yellen warns Congress of 'unthinkable' U.S. default risk without debt limit hike - Fin2me\" \/>\n<meta property=\"og:description\" content=\"WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen on Wednesday warned Congress that the United States risks a debt default and a new financial crisis as [...]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/fin2me.com\/markets\/yellen-warns-congress-of-unthinkable-u-s-default-risk-without-debt-limit-hike\/\" \/>\n<meta property=\"og:site_name\" content=\"Fin2me\" \/>\n<meta property=\"article:published_time\" content=\"2021-06-24T00:53:50+00:00\" \/>\n<meta name=\"author\" content=\"Mark\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/fin2me.com\/wp-content\/uploads\/2021\/06\/Yellen-warns-Congress-of-unthinkable-U.S.-default-risk-without-debt-limit-hike.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Mark\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/fin2me.com\/markets\/yellen-warns-congress-of-unthinkable-u-s-default-risk-without-debt-limit-hike\/\",\"url\":\"https:\/\/fin2me.com\/markets\/yellen-warns-congress-of-unthinkable-u-s-default-risk-without-debt-limit-hike\/\",\"name\":\"Yellen warns Congress of 'unthinkable' U.S. default risk without debt limit hike - 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