IBM CEO says he's confident debt ceiling will get resolved — but breach would be "highly destabilizing"
From CNN's Rob North
Chairman and CEO of IBM Arvind Krishna during his interview with CNN's Julia Chatterley this morning. CNN
The CEO of IBM said Monday he is confident that the debt ceiling will be resolved, but warned that a failure to extend it would be a “highly destabilizing” event for business and the global economy.
Speaking to Julia Chatterley on CNN’s First Move, Arvind Krishna said: “I have complete confidence it will get resolved, I think the question is when. Will it get resolved before a potential breach, I think that would be ideal for everybody, or right at the moment, or right after. I think any of those we could potentially live with. If it is more than a few days after, that is when we begin to run the risk of reputational damage."
"I’m actually confident that the United States will not breach, meaning all its debt will get paid but when is the exact question,” Krishna said.
8:53 a.m. ET, May 22, 2023
Treasury secretary reaffirms June 1 as the hard deadline to raise the debt ceiling
From CNN's Jasmine Wright
U.S. Secretary of the Treasury Janet Yellen speaks during the 2023 Independent Community Bankers of America (ICBA) Capital Summit on May 16 in Washington, DC. Alex Wong/Getty Images
“I indicated in my last letter to Congress, that we expect to be unable to pay all of our bills in early June and possibly as soon as June 1. And I will continue to update Congress, but I certainly haven't changed my assessment. So I think that that's a hard deadline,” Yellen said during an interview on NBC’s "Meet the Press" Sunday.
Biden issued a stark warning Sunday ahead of his high-stakes phone call with House Speaker Kevin McCarthy, saying congressional Republicans could use a national default to damage him politically. He also acknowledged time had run out to use potential unilateral actions to raise the federal borrowing limit, a sharp shift in tone days before the deadline to reach an agreement.
Reflecting that shift in tone, Yellen reiterated that some bills will go unpaid if the debt ceiling isn’t raised.
“There will be hard choices to make,” she said.
“Since 1789, the United States has a history of paying its bills on time. That's what the world wants to see — a continued commitment to do that," Yellen continued. "It's what underlies US Treasury securities as the safest investment on the planet. And it's not an acceptable situation for us to be unable to pay our bills.”
Yellen agreed with the president’s assessment that invoking the 14th Amendment, “doesn't seem like something could be appropriately used in these circumstances,” given the legal uncertainty and time frame. She downplayed the possibility of some extra unilateral action the president could take.
“My devout hope is that Congress will raise the debt ceiling,” she said. “There will be no acceptable outcomes if the debt ceiling isn't raised, regardless of what decisions we make.”
9:24 a.m. ET, May 22, 2023
Debt limit deal remains out of reach as McCarthy and Biden are expected to meet Monday afternoon
From CNN's Clare Foran, Haley Talbot and Ted Barrett
Susan Walsh/AP/Evelyn Hockstein/Reuters
The countdown is on, the stakes are high – and there is still no debt limit deal.
President Joe Biden and House Speaker Kevin McCarthy are slated to meet again Monday, following a weekend notable for its lack of progress in trying to reach a deal to avoid the country’s first-ever default on its debt.
In a sign of a possible thaw, Biden and McCarthy spoke over the phone as the president was aboard Air Force One, heading back to Washington after a shortened trip to Japan. McCarthy told reporters Sunday that the call was “productive.” But that came after Biden had sharply criticized Republicans at a news conference in Hiroshima, where he said he wasn’t able to promise fellow world leaders gathered for Group of Seven talks that the US would not default.
“I can’t guarantee that they will not force a default by doing something outrageous,” Biden said shortly before his departure tor the US.
It’s not uncommon for high-stakes negotiations on Capitol Hill to encounter setbacks and later recover, but the weekend-long snag underscored the challenge of finding consensus between the two sides as key sticking points remain.
Time is running short to raise the nation’s borrowing limit and the US could default as soon as June 1, the Treasury Department has warned, a position that Treasury Secretary Janet Yellen repeated Sunday. If lawmakers and the White House are unable to reach a deal, a global economic catastrophe would likely be triggered.
Analysis: US economy on the brink as time runs low to avert debt default
From CNN's Stephen Collinson
A view of the U.S. Capitol dome on May 16 in Washington, DC. Drew Angerer/Getty Images
America is heading close to the brink of a self-imposed economic disaster with the Republican-led House refusing to pay the country’s debts unless President Joe Biden agrees on cuts to current and future spending and new curbs on social programs.
Unless a compromise to raise the government’s borrowing authority is reached within days, the US could lose its reputation as the stable anchor of the global economy. Millions of people could see retirement and veterans benefits put on hold once the government exhausted its ability to pay its debts due to the borrowing cap set by Congress.
A US default would reverberate through the financial market, likely triggering a recession that would cause serious job losses and shatter an already fragile sense of economic security for many families.
After a weekend of acrimony between negotiators for House Republicans and the White House, Biden will meet House Speaker Kevin McCarthy Monday for critical talks on pulling the economy back from the precipice. The president just returned to the US from Japan, where he was put in the stunning position of being unable to reassure fellow world leaders that Washington will not tip the global economy into chaos.
Pressure on the meeting is immense, since Treasury Secretary Janet Yellen has warned that the government will be unable to meet its obligations unless Congress raises the debt ceiling by June 1. But serious damage could occur before then because the mere suggestion that the crisis cannot be solved could send panic through financial markets and damage confidence in US creditworthiness.
Biden has already backed down from his position that he will not negotiate over the debt limit — which needs to be raised to pay for spending already authorized by Congress and authored by him and previous presidents. His officials say it’s irresponsible for the GOP to hold the country “hostage” on such a critical issue. Republicans, however, say that the government is spending too much money and see the threat of financial calamity as their premier leverage against Biden.
While Biden was in Japan, the only stop of a longer trip he was forced to cut short, negotiators from both sides appeared to make progress before talks stalled, with each side blaming the other. The president suggested that the pro-Donald Trump extremists in the House were ready to sabotage the economy in a bid to doom his reelection campaign.
“I think there are some MAGA Republicans in the House who know the damage it would do to the economy, and because I am president, and a president is responsible for everything, Biden would take the blame and that’s the one way to make sure Biden’s not reelected,” he said in Japan.
McCarthy said Sunday morning that Biden was shifting positions because of pressure within his own party. “So I think he’s got to get away from the socialist wing of the Democratic Party and represent America,” the speaker told reporters.
