Failure to raise debt ceiling would be an 'economic catastrophe,' Treasury Secretary Yellen says

Yellen's comments came as a political stalemate over raising the debt limit was forcing the Treasury Department dangerously close to a worst-case scenario: a potential U.S. debt default.

President Joe Biden will meet Tuesday with the four top leaders of Congress. The White House says it will not negotiate over the debt limit, but Republicans say the meeting proves the president is coming to the table. U.S. Treasury Secretary Janet Yellen holds a news conference in the Cash Room at the Treasury Department on April 11, 2023 in Washington, DC."That is something that could produce financial chaos, it would drastically reduce the amount of spending and would mean that Social Security recipients and veterans and people counting on money from the government that they're owed, contractors, we just would not have enough money to pay the bills," said Yellen.

In order to avoid a default on the nation's debt, Congress must vote to either raise or suspend the debt limit before Treasury runs out of emergency funding. But with only eight days left this month during which both the House and the Senate are scheduled to be in session at the same time, time is running out to reach a deal.

Treasury and the Congressional Budget Office both released new reports last week predicting that these measures could be exhausted as early as June 1, which was sooner than Wall Street or the White House had been expecting. The new, earlier date was the result of lower than expected federal tax revenues in April.will host a high stakes meeting at the White House with the four top leaders of Congress: House Speaker Kevin McCarthy, R-Calif., House Minority Leader Hakeem Jeffries, D-N.Y.

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