Treasury Secretary Janet Yellen said Wednesday that her department is not involved in planning for a default if Congress and the White House are unable to reach an agreement to lift the debt limit.
“We are committed to not having missed payments and raising the debt ceiling,” Yellen said Wednesday via video conference to an event in London, Bloomberg News reported. “We’re not involved in planning for what happens if there’s a default,” she added when asked whether the Treasury was engaged with major financial institutions in game-planning a default scenario.
The Treasury Secretary did not say whether the Treasury is planning to prioritize payments so that some of the federal government’s expenditures could be delayed while payments for interest on principal on U.S. government bonds would still be made. Previously, Yellen has said she does not think it would make sense to issue debt not authorized by Congress under a claim that the executive can do so with an untested authority allegedly created by the Fourteenth Amendment.
The precise meaning of Yellen’s statement left many analysts scratching their heads.
When Cortés arrived in what is today Mexico his men were tired. So, he burned his ship (no returning) to motivate them.— Jim Bianco biancoresearch.eth (@biancoresearch) May 24, 2023
*YELLEN: UNINVOLVED IN PLANNING FOR WHAT HAPPENS IN DEFAULT CASE
Is Yellen saying there will be no payment prioritization, no 14th Amendment, no…
“Treasury and President Biden will face very tough choices if Congress doesn’t act,” Yellen said.
Many believe that Yellen is intentionally avoiding discussing alternatives to raising the debt ceiling, fearing that doing so might discourage negotiators in Congress from reaching a deal with the White House.