Yellen Warns of Missed Payments if Debt Limit Is Not Lifted

“Prioritization is not really something that is operationally feasible,” Ms. Yellen said.

This week, Ms. Yellen notified Congress that the federal government could run out of cash as soon as June 1. Her projections have been met with skepticism by some House Republicans, who have been calling on her to produce an analysis that details the Treasury Department’s cash reserves to prove that the deadline is real.

Ms. Yellen said on Wednesday that there was considerable uncertainty associated with tracking government payments and receipts but that she planned to provide as much clarity as possible in her next update.

The Treasury secretary said she was already seeing “the beginnings” of stress in financial markets due to the brinkmanship. However, she said she had not been engaging with investors about what would happen if the debt limit was not lifted.

“We are committed to not having missed payments and raising the debt ceiling,” Ms. Yellen said. “We are not involved in planning for what happens if there is a default.”

Despite her concerns, Ms. Yellen said that she was hopeful the negotiations would be successful and that the Biden administration has been committed to policies that would reduce deficits.

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