U.S. Treasury Secretary Janet Yellen on Tuesday warned that the failure of Congress to raise the government debt ceiling would trigger an "economic catastrophe" that would lead to higher interest rates for years to come.
Yellen, in a speech prepared for a Washington event with business executives from California, said a US debt default would result in job losses, while pushing household payments on mortgages, car loans and credit cards higher.
He said it was Congress' "fundamental responsibility" to raise or suspend the $31.4 trillion borrowing limit, warning that a default would threaten the economic progress the United States has made since the COVID-19 pandemic.
If the debt ceiling is not raised, U.S. businesses will face a deteriorating credit market, and the government may not be able to make payments to military families and seniors who rely on Social Security, he said.
"Congress must vote to raise or suspend the debt limit. It should do so unconditionally. And it shouldn't wait until the last minute."
Yellen informed legislative officials in January that the government could pay its bills only until early June without raising the limit.
Markets are now increasingly worried about the U.S. economic situation for the future.
