Treasury Secretary Yellen Insists US Could Default on June 1 — Goldman Sachs Estimates ‘Real Deadline’ Is a Week Later

U.S. Treasury Secretary Janet Yellen has insisted that the U.S. could default connected its indebtedness obligations connected June 1. “I deliberation that’s a hard deadline,” she stressed. Meanwhile, planetary concern slope Goldman Sachs has estimated that the “real deadline” for a imaginable U.S. default is “more like” June 8-9.

Yellen and Goldman Sachs connected U.S. Default, Debt Ceiling

U.S. Treasury Secretary Janet Yellen reiterated her concerns astir a imaginable U.S. default connected NBC’s “Meet the Press” Sunday. Responding to a question astir the June 1 deadline for a imaginable U.S. default, she said:

I indicated successful my past missive to Congress that we expect to beryllium incapable to wage each of our bills successful aboriginal June and perchance arsenic soon arsenic June 1. And I volition proceed to update Congress, but I surely haven’t changed my assessment. So I deliberation that’s a hard deadline.

However, the U.S. authorities is expecting immoderate taxation payments connected June 15 which would supply immoderate revenue. When asked astir the likelihood the U.S. could get to June 15 “to debar breaching the indebtedness ceiling,” Yellen said: “There’s ever uncertainty astir taxation receipts and spending. And truthful it’s hard to beryllium perfectly definite astir this, but my appraisal is that the likelihood of reaching June 15th, portion being capable to wage each of our bills, is rather low.”

Commenting connected “extraordinary measures” that President Joe Biden could instrumentality to resoluteness the indebtedness ceiling contented successful Congress, Yellen said: “There has been overmuch treatment of the 14th Amendment. And, arsenic President Biden said … it doesn’t look similar thing that could beryllium appropriately utilized successful these circumstances, fixed the ineligible uncertainty astir it, and fixed the choky timeframe we’re on. So my devout anticipation is that Congress volition rise the indebtedness ceiling.”

Yellen noted:

My presumption is that if the indebtedness ceiling isn’t raised, determination volition beryllium hard choices to marque astir what bills spell unpaid.

Global concern slope Goldman Sachs, however, predicts that the U.S. could default connected its indebtedness obligations astir 1 week aft June 1. Alec Phillips, Goldman Sachs’ main governmental economist, told Bloomberg TV connected Friday: “The world is that Congress has to bash this astatine immoderate constituent precise soon, and they should conscionable spell up and bash it … So waiting for the past infinitesimal isn’t needfully the close move, adjacent though we deliberation that possibly they could spell a small spot longer.”

The Goldman Sachs economist shared:

Our conjecture close present is that the existent deadline is astir apt much similar June 8th, 9th, that’s erstwhile they’re astatine benignant of top risk.

The Congressional Budget Office (CBO) precocious said that determination is simply a important hazard of the U.S. defaulting successful the archetypal 2 weeks of June.

Many radical person warned that the U.S. defaulting connected its indebtedness obligations volition person catastrophic consequences, including a global fiscal crisis. Top executives of 146 large companies successful the U.S. person urged Biden and legislature leaders to enactment swiftly to forestall a U.S. default, informing of “disastrous consequences.” Moreover, immoderate judge that a U.S. default would hazard the dollar’s reserve currency status.

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