(Niigata) Pushing U.S. debt negotiations to their limits is inherently dangerous for the economy, Treasury Secretary Janet Yellen warned Thursday, as former President Donald Trump called on Republicans to wave the threat of default of payment by the country.
Democrats and Republicans in Congress are currently unable to agree on raising the US public debt ceiling, and a prolonged stalemate could lead to a US default as early as this summer, which would be never seen.
Merely flirting with such a situation can “incur significant economic costs”, warned Ms.me Yellen at a press conference in Niigata (central Japan) where a meeting of G7 finance ministers and central bankers is being held from Thursday to Saturday.
“As we already learned in 2011, the mere threat of default can lead to a downgrade in our financial rating and weakened consumer confidence,” with interest rate hikes on loans, she added.
A default in payment would produce an “economic and financial disaster” in the United States, with global repercussions, she also recalled, echoing similar statements from her and the White House in recent years. days.
A few hours before Mr.me Yellen in Japan, Donald Trump, who is seeking re-election to the presidency of the United States in 2024, has urged elected Republicans to cause a default unless they obtain “massive” budget cuts from the Democrats.
US President Joe Biden has so far ruled out negotiating budget cuts and accused Republicans of holding the economy “hostage”.
“There is no good reason to generate a crisis ourselves,” insisted Thursday Mme Yellen, recalling that the US Congress had already raised or suspended the debt ceiling around 80 times since 1960.
“To default on our debt would affect the United States and the global economy so much that I think it should be considered by everyone as something unthinkable,” said Mr.me Yellen, invited by AFP to react directly to Mr. Trump’s remarks.
All the congressional officials who met on Tuesday were in agreement on this point, which is why “I am optimistic that the differences can be overcome and the debt ceiling will be lifted”, she said. added.