By David Lawder
WASHINGTON, Feb 14 (Reuters) - U.S. Treasury Secretary
Janet Yellen warned county leaders on Tuesday that their
residents could lose jobs and federal benefit payments if
Congress allows the United States to default on payment
obligations by failing to lift the federal debt ceiling.
Yellen, speaking to the National Association of Counties,
offered no new details on when the U.S. Treasury may run out of
cash and borrowing capacity without a debt limit increase. She
has said the United States can pay its bills at least through
early June by employing extraordinary cash management measures.
"In my assessment — and that of economists across the board
— a default on our debt would produce an economic and financial
catastrophe. Many of your residents could ultimately lose their
jobs," Yellen said.
Republicans who control the U.S. House of Representatives,
have demanded spending concessions from President Joe Biden, a
Democrat, in exchange for an increase in the $31.4 trillion debt
ceiling. Biden had said he will not negotiate over raising the
limit, which is about past spending decisions.
Reuters reported earlier on Tuesday that Republicans taking
the hardest line in the standoff appear immune to business
lobbying pressure on the debt ceiling because they rely heavily
on small donors to fund their campaigns.
Yellen told county leaders gathered in Washington that since
the U.S. Treasury's founding in 1789, it has paid U.S. bills on
time and "it should stay that way."
To prevent an "economic catastrophe, she added that Congress
should raise or suspend the limit without conditions and without
waiting "until the last minute."
After a default, "household payments on mortgages, auto
loans, and credit cards would rise, and American businesses
would see credit markets deteriorate," she said. "On top of
that, it is unlikely that the federal government would be able
to issue payments to millions of Americans, including our
military families and seniors who rely on Social Security."
She said in the longer-term, a default would permanently
raise the cost of borrowing.
"Future investments — including public investments — would
become substantially more costly.
(Reporting by David Lawder; Editing by Chizu Nomiyama)
david.lawder.thomsonreuters.com@reuters.net))
