U.S. Treasury Secretary Janet Yellen on Saturday described the crisis over raising the U.S. debt ceiling as "more difficult" than before, but she still hopes a solution can be found to prevent the first default in U.S. history.
Yellen told Reuters in an interview on the sidelines of a meeting in Japan of Group of Seven finance officials that she hoped to brief the U.S. Congress within the next two weeks when Treasury funds would run out to pay government bills.
Yellen has repeatedly appealed to Congress to approve raising the $31.4 trillion federal borrowing cap to prevent an "economic and financial catastrophe" if the United States defaults.
British Finance Minister Jeremy Hunt told reporters that the confrontation between Yellen and Congress posed a "very serious" threat to the global economy.
Speaking on the sidelines of the Group of Seven meetings, Hunt said: "It would certainly be devastating if America's GDP were derailed by no deal."
Yellen said her estimate last week that the Treasury Department may not be able to meet its repayment obligations by June 1 was consistent with a report released Friday by the Congressional Budget Office warning of a "serious risk" of default in the first two weeks of June.
US President Joe Biden insists that it is Congress' constitutional duty to raise the debt ceiling unconditionally to pay for pre-approved expenditures, while Republicans who control the House of Representatives want Biden to approve deep budget cuts to secure their approval.
Unlike most developed countries, the United States sets a ceiling on how much it can borrow, and lawmakers should raise that ceiling periodically, because the government spends more than it earns.
Attract
Yellen says the first major debt ceiling confrontation since 2011 reflects the continued division of the United States into extremes after Donald Trump's presidency.
"It's certainly not positive for relationships, global standing and credibility, this time may be more difficult, but I hope we can find a solution."
Yellen said it was a positive sign that "almost everyone" agreed in a meeting Biden held with congressional leaders on Tuesday that it would be unacceptable for the United States to default.
Yellen said Biden, who is expected to meet again with congressional leaders this week, still sees attending the Group of Seven summit starting next Friday in Hiroshima as a priority, but quoted him as saying he could cancel the trip unless enough progress is made to end the impasse.
Despite the debt ceiling battle, Yellen says she remains convinced that the Biden administration has re-established U.S. leadership in the world, noting that the group's other leaders are taking a very different stance toward the Trump administration.
In a report this week, the bipartisan Policy Center said some Treasury officials considered the approach the most realistic and least damaging during the 2011 crisis.
"We shouldn't talk about that," Yellen said, adding, "We should talk about raising the debt ceiling, every plan has serious downsides."