Washington – President of the European Central BankOn Sunday he said it was “not possible” for the United States to default on its debt as Congress faces a fast-approaching deadline to address the debt ceiling.
“I can’t believe they would allow such a major catastrophe to happen as the United States defaults on its debt. It’s not possible.” Lagarde said in an interview with Face the Nation. “I can’t believe that will happen. But if it did, it would have very negative effects, not only on this country where trust will be challenged, but all over the world.”
Lagarde said she has “great confidence” in the United States
Lawmakers are due back in Washington Monday after a two-week recess and staring at the approaching summer deadline to raise or suspend the debt ceiling. thein January, forcing the Treasury Department to begin using “extraordinary measures” to keep paying the bills.
But the Congressional Budget Office estimates that those measures will be exhausted as soon as July, putting the US at risk of defaulting at all without congressional action.
While President Biden and House Speaker Kevin McCarthy met in early February to discuss the debt ceiling, McCarthy last monthFrom the talks, the two reached an impasse on how to address the debt ceiling.
House Republicans demanded any plan to raise the debt ceiling including federal spending cuts, while the White House and Democrats urged Congress to pass a “clean” bill that raises the debt ceiling without conditions.
Largaard said she had “great confidence” in the United States, urging both sides to break the deadlock and work toward consensus on a plan to tackle the debt ceiling.
“I understand politics,” she said, “I’ve been in politics myself.” “But there comes a time when the supreme interest of the nation must prevail.”
A US default on its debt obligations would be catastrophic and unprecedented, and Democrats have accused their fellow Republicans of playing irresponsibly with the economy. But GOP lawmakers have warned that failure to rein in government spending puts the economy at risk and said the cuts are necessary to bring down inflation.
If the stalemate between Democrats and Republicans continues, and the two sides cannot reach an agreement to raise or suspend the debt limit, Lagarde warned of the potential for global repercussions.
“Let’s face it, this is the largest economy,” she said. “It’s a major driver of economic growth around the world. It can’t let that happen.”