The U.S. government will have to default on some payments if Congress fails to raise the national debt ceiling before June, Treasury Secretary Janet Yellen said.
“If Congress fails to do that, it really impairs our credit rating. We have to default on some obligation, whether it’s Treasuries or payments to Social Security recipients,” Yellen said on Friday in an interview with Bloomberg.
“That’s something America hasn’t done since 1789,” she continued, referring to a time when the new-born United States failed to pay back money it borrowed to finance the war against the British Empire. “And we shouldn’t start now. So we’ve not discussed what to do.”
When asked about the speculation that her department would prioritize payments of interest and principal on Treasury securities in a default scenario, Yellen said the White House has never reviewed or approved such a plan.
“My understanding—I was at the Fed in 2011—is that this plan was never presented to the president and never approved,” Yellen told Bloomberg. In 2011, she was serving as vice chair of the Federal Reverse.
When asked if she would now present that plan to prioritize Treasuries to the president, Yellen replied, “We are working full time to work with Congress to raise the debt ceiling. That’s where our focus is.”
Yellen Warns of Credit Downgrade
The remarks comes after she argued that a U.S. government default might trigger a downgrade of its credit rating and weaken consumer confidence, similar to what happened in 2011.
“A default would threaten the gains that we’ve worked so hard to make over the past few years in our pandemic recovery. And it would spark a global downturn that would set us back much further,” Yellen said Thursday in Japan, where she was attending a meeting of finance chiefs and central bankers of G7 countries.
“It would also risk undermining U.S. global economic leadership and raise questions about our ability to defend our national security interests,” she added.
Yellen pointed to the 2011 debt ceiling crisis that prompted Standard & Poor’s to lower the United States’ long-held top-notch AAA sovereign credit rating to AA-plus. She warned that another downgrade would drive up interest rates for consumers and companies seeking loans.
“We could see a rise in interest rates drive up payments on mortgages, auto loans, and credit cards. We are already seeing spikes in interest rates for debt due around the date that the debt limit may bind,” she said.
“The U.S. Congress has raised or suspended the debt limit about 80 times since 1960. I urge it to act quickly to do so once again.”
Democrats, Republicans Blame Each Other
Yellen’s comments echo those of President Joe Biden, who criticized Republican members of Congress for wanting to tie the debt limit increase to deficit-savings measures.
“They’re literally—not figuratively—holding the economy hostage by threatening to default on our nation’s debt,” Biden said Wednesday of what he called “extreme MAGA Republicans.”
Although the Biden administration insists that Congress pass a “clean” debt ceiling increase, almost every major debt ceiling agreement in the past 30 years had at least some kind of deficit-reduction law attached to it, including the 1993 Deficit Reduction Act under the Clinton administration, and the 2010 Pay-As-You-Go Act and the 2011 Budget Control Act under the Obama administration.
Republican congressional leaders remain cautious on defaulting national debt, as the nation’s top Republican, former President Donald Trump suggested that it’s better to let the U.S. government default than passing a budget that doesn’t include spending cuts.
“I say to the Republicans out there—Congressmen, Senators—if they don’t give you massive cuts, you’re going to have to do a default,” Trump said Wednesday during a town hall event hosted by CNN in New Hampshire.
“I don’t believe they’re going to do a default because I think the Democrats will absolutely cave because you don’t want to have that happen,” he told an undeclared voter in the audience. “But it’s better than what we’re doing right now, because we’re spending money like drunken sailors.”
Speaking the day after the Trump town hall, Speaker of the House Kevin McCarthy (R-Calif.) said his party is working to avoid a default, while Democrats are pushing the nation closer to one.
“The only thing I see right now is that the Republicans made sure default is not on the table. We’ve raised the debt limit,” he said, reported The Hill.
“The only person talking about default right now is President Biden. His actions, he’s ignored this problem, just like he’s ignored the border, that means more Americans are gonna die from fentanyl. You had 11,000 people just yesterday come across.”
Article cross-posted from our premium news partners at The Epoch Times. Image via Mark Warner, CC BY 2.0, via Wikimedia Commons.
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Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.