US Treasury Secretary Janet Yellen warned that the US could default on its debt in early June. Meanwhile, US politicians are tussling over raising the government’s borrowing limit.
Yellen wrote a letter to House Speaker Kevin McCarthy, stating that unless Congress acts, there will be “grave hardship for American families.” He added: “A default would damage our global leadership position and cast doubt on our ability to defend our national security interests.” Experts warn of a possible crisis on the scale of the 2008 financial collapse.
Eric Van Nostrand, acting assistant secretary for economic policy, said in a statement that “even if Congress ultimately raises the debt limit before a default occurs, the resulting uncertainty could increase borrowing costs and induce other financial stresses that would weaken our labor market and our economy.