US Default Risk Looms: Yellen Warns of June 1 Deadline, Goldman Sachs Predicts One Week Grace Period

US Default Risk Looms: Yellen Warns of June 1 Deadline, Goldman Sachs Predicts One Week Grace Period


U.S. Treasury Secretary Janet Yellen warns of a possible June 1 default on U.S. debt obligations, while Goldman Sachs predicts the “real deadline” for default is more like June 8-9, with disastrous consequences predicted if action is not taken.

United States Treasury Secretary Janet Yellen has insisted that the United States could default on its debt obligations on June 1. “I think that’s a hard deadline,” she stressed. In the meantime, worldwide financing bank Goldman Sachs Group has estimated that the “real deadline” for a possible United States default is “more like” June 8-9.

Yellen and Goldman Sachs Group on United States Default, Debt Ceiling

United States Treasury Secretary Janet Yellen reiterated her concerns about a possible United States default on NBC’s “Meet the Press” Sunday. Responding to a question about the June 1 deadline for a possible United States default, she said:

I indicated in my last letter to Congress that we expect to be unable to pay all of our bills in early June and possibly as soon as June 1. And I will continue to update Congress, but I certainly haven’t changed my assessment. So I think that’s a hard deadline.

Nonetheless, the United States Government is expecting some tax payments on June 15 which would provide some revenue. And once requested about the likelihood the United States could get to June 15 “to avoid breaching the debt ceiling,” Yellen stated: “ There is always uncertainty about tax receipts and spending. And so it’s hard to be definitely certain in relation to this, but my assessment is the fact that the odds of reaching June 15th, while being able to pay all of our bills, is very low.”

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Commenting on “extraordinary measures” that President Joe Biden could take to fix the debt ceiling issue in Congress, Yellen stated: “There has been much discussion of the 14th Amendment. And, as President Biden stated … it doesn’t seem like something that may be appropriately used in these circumstances, given the legal uncertainty around it, and given the tight timeframe we’re on. So my devout hope is the fact that Congress will raise the debt ceiling.”

Yellen noted:

My assumption is the fact that if the debt ceiling isn’t raised, there will be hard choices to make about what bills go unpaid.

Worldwide financing bank Goldman Sachs Group, on the other hand, predicts that the United States could default on its debt obligations approximately one week after June 1. Alec Phillips, Goldman Sachs’ chief political economist, informed Bloomberg Television on Friday: “ The truth is the fact that Congress has to achieve this at some point very soon, and they should just go ahead and do it … So waiting for the last minute isn’t necessarily the right move, despite the fact that we think that maybe they could go a little bit longer.”

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The Goldman Sachs Group economist shared:

Our guess at this time is the fact that the real deadline is probably more like June 8th, 9th, that’s when they’re at sort of greatest risk.

The Congressional Budget Office (CBO) recently stated that there is a whole lot of danger of the United States defaulting in the 1st two weeks of June.

Numerous people have warned that the United States defaulting on its debt obligations will have catastrophic consequences, including a worldwide financial crisis. Top executives of 146 major corporations in the United States have urged Biden and congressional leaders to act swiftly to prevent a United States default, warning of “ catastrophic consequences.” Furthermore, some believe that a United States default would danger the dollar’s reserve currency status.

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