Treasury: Congress' Failure to Raise Debt Ceiling Weakens Credit Rating

US Treasury Secretary Janet Yellen confirmed that the only solution in the current crisis is for Congress is to raise the US debt ceiling.

"What U.S. households, businesses, and global markets need to see is a congressional commitment to repay," Yellen said, in an interview with Bloomberg TV on Friday.

"If Congress fails to do this, it really weakens our credit rating," Yellen said, speaking on the sidelines of a meeting of the G7 financial chiefs in Niigata, Japan.

Yellen declined to say what steps her department would take if Congress fails to raise or defer the debt ceiling before the Treasury Department finds itself unable to cover all of the government's liabilities.

President Joe Biden and House Speaker Kevin McCarthy postponed a meeting on the debt ceiling that was scheduled for Friday, and people familiar with the talks said the delay was a sign that personnel talks were making progress.

Biden and congressional Republicans have been locked in disagreements for weeks over raising the US federal government's borrowing limit of $31.4 trillion, and GOP leaders have demanded promises of future spending cuts before agreeing to a higher cap. 

On his part; Biden insisted on a "clean" increase, with budget talks going a separate track.

The government reached its legal maximum borrowing limit in January, and since then the Treasury Department has been using special accounting measures to make cash available, and Yellen told Congress that those measures could expire on June 1.