After hitting the $31.4 trillion national debt limit back in January, Treasury Secretary Janet Yellen began using “extraordinary measures” to keep the government running. But in a string of recent interviews, Yellen has repeatedly warned that she can’t keep the game up forever. She says the X-date, the day the government will no longer have the funds to operate, could come as soon as June 1 and bring with it economic catastrophe.
In the face of this nightmare scenario, the pressure on politicians to get a debt deal done has been intense. Famed economists, including Harvard professor Jason Furman, have lamented the unnecessary economic drag caused by the debt ceiling “brinkmanship” in Washington. And respected Wall Streeters have also been sounding the alarm, including Morgan Stanley’s chief investment officer Mike Wilson, who warned this week that the debt ceiling drama is a “lose-lose for markets.” CFOs nationwide are even preparing for a world where the U.S. defaults on its debts, with JPMorgan Chase CEO Jamie Dimon describing a “war room” he’s created to plan for the worst.
