Jan 21, 2023 - Economy

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

Sareen Habeshian

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

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