Minister of Finance USA Janet Yellen issued a stern warning today, stressing that a possible failure by Congress to act on the debt ceiling could spark a “constitutional crisis” that would also cast doubt on the creditworthiness of the federal government.

Yellen sounded the alarm about the possible implications for the financial market if the debt ceiling is not raised by early June, noting that the federal government could face a cash shortage.

Negotiations on this issue should not be carried out “with guns in the head of the American people,” Yellen said on ABC’s This Week.

Biden asked Congress to unconditionally raise the national debt ceiling. The Republican-led House of Representatives passed a bill last month to raise the national debt ceiling, which already stands at $31.4 trillion. dollars, but the measure included sharp spending cuts over the next decade, which Biden and Democrats oppose.

Biden is scheduled to meet Tuesday at the White House with Republican House Speaker Kevin McCarthy, Senate Minority Leader Mitch McConnell and leading Congressional Democrats to discuss the issue.

“It is the responsibility of Congress. If this fails, we will have an economic and financial disaster of our own fault,” Yellen said. “And we should not get to the point where we have to think about whether the president can continue to issue debt This will be a constitutional crisis,” he added, referring to the separation of executive and legislative powers under the US Constitution.

Biden has repeatedly said he will not negotiate a higher debt ceiling, but will discuss budget cuts after the new limit is passed. Congress has often combined debt ceiling increases with other budgetary and spending measures.

The bill, passed by the House of Representatives, would cut spending to 2022 levels and then cap growth to 1 percent a year, remove some renewable energy tax credits, and increase requirements for some anti-poverty programs.

Senate Majority Leader Chuck Schumer last week began laying the groundwork for a bill that would unconditionally suspend the national debt cap for two years. But Republicans in the Senate and House of Representatives said they would not vote for such a measure.

Source: Reuters.