Biden administration officials continued to downplay the possibility that the Treasury could avoid defaulting after the X date by prioritizing payments to bondholders. It also rejected provocative measures such as invoking the 14th Amendment as a way to continue borrowing, and instead renewed calls for Congress to remove the debt ceiling.
Deputy Treasury Secretary Wally Adiemo told CNN Friday that “Congress has the ability to do that and the president is asking Congress to act as soon as possible.”
White House National Economic Council Director Lael Brainard urged negotiators to double down on their efforts to reach a deal.
“Negotiators have made progress toward a reasonable bipartisan budget agreement in recent days, and the Secretary’s letter underscores the urgent need for Congress to act quickly to prevent a default,” Brainard said. There are,” he said.
In her letter, Yellen also described additional accounting manipulations, known as “temporary measures,” that she was taking to delay a possible default until June 5. The action included moving $2 billion in Treasury bills between the Civil Servants Retirement and Disability Fund. and the Federal Financial Bank.
“Remaining resources are so low that we must exhaust all available extraordinary measures to avoid falling short of all government commitments,” Yellen said.
Financial markets have become more volatile as the deadline for the U.S. to avert a possible default is approaching. Fitch Ratings announced this week that it will put the country’s highest AAA credit rating for review. Possibility of downgrading. Another rating agency, DBRS Morningstar, made a similar assessment on Thursday.
In her letter, Yellen said the conflict was already putting strain on financial markets.
“We believe that past debt limit deadlocks mean that waiting until the last minute to suspend or raise debt limits will seriously damage business and consumer confidence, raise short-term borrowing costs for taxpayers, We have learned that it can negatively impact the credit rating of the U.S. state,” she wrote.
Luke Broadwater Contributed to the report.
