Treasury Secretary Warns US House Members of 'Economic Collapse' from Default

US Treasury Secretary Janet Yellen urged members of the US House of Representatives on Friday to raise the federal debt ceiling without conditions, warning that a default on US debt would cause "economic and financial collapse".

Yellen, in budget testimony before the Republican-controlled House Ways and Means Committee, said that failure to increase the $31.4 trillion borrowing cap would threaten the economic progress that the US has made since the COVID-19 pandemic, Reuters reported.

"In my assessment - and that of economists across the board - a default on our debt would trigger an economic and financial catastrophe," Yellen said.

"I urge all members of Congress to come together to address the debt limit – without conditions and without waiting until the last minute," she added.

Asked about the possibility of prioritizing payments to cover US debt payments first from available cash resources, as some Republicans have suggested, Yellen said that was "not a solution to the debt ceiling issue".