Jan 21, 2023 - Economy

Yellen: Defaulting on debt could cause "self-imposed calamity"

U.S. Treasury Secretary Janet Yellen is seen on Jan. 10 in Washington, D.C. Photo: Kevin Dietsch/Getty Images

A potential default on the federal debt "would impose a self-imposed calamity in the United States and the world economy," Treasury Secretary Janet Yellen said in an interview with AP Saturday.

Driving the news: Yellen said she expects that Congress will eventually vote to raise the debt limit, after the Treasury Department announced this week that the U.S. has reached its $31.4 trillion debt ceiling.

Catch up quick: Yellen on Friday ruled out a potential proposal from House Republicans that calls for triaging payments after the exhaustion of "extraordinary measures" to avoid default.

What she's saying: When asked about potential demands from the GOP for spending cuts in exchange for backing a higher debt limit, Yellen called the position "a very irresponsible thing to do" and said it could have serious consequences even before "the day of reckoning."

  • "It is possible for markets to become quite concerned about whether or not the U.S. will pay its bills," she told AP, highlighting the negative economic impacts of the 2011 debt showdown.
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