The use of a constitutional amendment by the President of the United States to avert default because the nation has reached its debt limit could trigger a full-scale constitutional crisis in America. This concern was raised by US Treasury Secretary Janet Yellen during an interview with ABC News.
“We should not be in a position where we question whether the president can solve the debt problem. There will be a constitutional crisis,” the secretary stated.
She emphasized that the government’s top priority should be persuading Congress to “do its job and raise the national debt ceiling.”
“Otherwise, that pathway will not end well for the country’s economic trajectory,” Yellen added.
The secretary noted that the Treasury’s ability to avoid default through “extraordinary” measures is gradually running dry. “Emergency actions have been in place for months, but they cannot last indefinitely,” the head of the Treasury Department warned.
According to her, the department remains uncertain about exact estimates of a possible default.
“We expect to run out of fiscal maneuvering at the start of June. There is a real chance this could occur on June 1,” Yellen said, stressing the serious uncertainty of the timeline.
On May 2, Yellen sent a letter to Congress informing lawmakers that emergency funding could be exhausted by June 1 if the debt limit is not raised or suspended. The treasury secretary noted that Congress must act to prevent the government from failing to meet its obligations.
“Since federal revenues and spending are volatile, the precise date when emergency measures end could shift by weeks,” the letter explained.
Simultaneously, delaying a decision to raise the debt limit could undermine business and consumer confidence, raise borrowing costs, and seriously erode the United States’ credit rating.
The debt limit—often described as a cap on how much the government can borrow to meet its obligations—restricts new bond issuance once reached. With the limit in place, the Treasury can only prioritize bill payments to the extent that revenues allow.
On May 7, Bloomberg reported that a bloc of 43 Republican senators refused to agree to raise the debt ceiling. Members of the Senate argued that substantial spending reductions and budget reforms were necessary from the Biden administration.
“Our economy is in free fall because current fiscal policy is unsustainable,” the minority letter stated.
On May 9, Biden and congressional leaders planned negotiations with Republican lawmakers about potential budgetary restraints. The Democratic approach contends that linking spending cuts to a debt-limit increase amounts to hostage-taking.
On May 6, The Economist noted that the United States could default or experience a drastic reduction in government spending given the debt’s size. Both scenarios pose significant risks to the global economy, and Washington has shown reluctance to quickly rectify the situation.
“A default would erode confidence in the world’s most important financial system, and severe fiscal tightening could trigger a deep recession. Yet the debt ceiling remains a political construct with questionable economic sense,” the article observed.
There is a sense that, even with any potential agreement to raise the debt limit, the outcome could still be damaging. The country’s financial stability would continue to face pressure, and the path forward would remain contentious.
Analysts suggest that Democrats face challenges in presenting a durable fiscal plan. The coverage notes that a genuine crisis could prompt changes in economic policy, though such changes would likely require hard choices and significant spending reductions that could restrain growth and trigger painful adjustments.
Why might the US be at risk of default?
The national debt ceiling rose above the legal ceiling of about $31.4 trillion on January 19, 2023. In response, the Treasury began to take steps to mitigate default risk. Over the next decade, projections indicated that substantial portions of government spending would go toward interest payments on the public debt.
Looking ahead, net interest outlays are expected to surpass many other major budget items, including defense, according to the Congressional Budget Office.
The national debt represents the federal government’s obligation to its creditors. The government operates by borrowing to fund current expenditures, including healthcare, military needs, and essential services.
The growth of the debt has been driven by persistent deficits and spending needs tied to recent crises and policy responses. Increased outlays during the COVID-19 period—including benefits—contributed to the debt limit being reached earlier than many observers anticipated.
In the United States, a default would occur only if Congress blocks action to raise the ceiling. While states have faced periods near default, lawmakers have repeatedly chosen to raise or suspend the limit to keep operations funded. Attribution: Financial reporting and analyses from major outlets and policy institutions were used to inform this synthesis.