U.S. Treasury's Adeyemo sees no ability to 'triage' payments without debt limit hike

The National Action Network National Convention in New York
U.S. Deputy Treasury Secretary Wally Adeyemo attends the National Action Network National Convention in New York, U.S., April 8, 2022. REUTERS/Eduardo Munoz/File Photo

May 26 (Reuters) - Deputy U.S. Treasury Secretary Wally Adeyemo said on Friday that the U.S. government does not have the capability to "triage" payments if the debt ceiling is not raised, adding that invoking the 14th amendment to issue debt will not solve the government's challenges.

Speaking on CNN as the White House and congressional Republicans neared an agreement that would cap spending and raise the borrowing cap, Adeyemo said: "I don't have any confidence that we have the ability to be able to do a type of prioritization that will mean that all seniors, all veterans, all Americans get paid."

A U.S. official told Reuters that the White House and congressional Republicans on Friday were putting the final touches on a deal that will raise the U.S. government's $31.4 trillion debt ceiling for two years while capping discretionary spending on everything but the military and veterans.

"We're making progress. And our goal is to make sure that we get a deal because default is unacceptable," Adeyemo said, adding that Biden was seeking to keep policies in place to protect the most vulnerable Americans.

After warnings of possible U.S. downgrades from credit ratings agencies, Adeyemo said he hoped that would not happen, but the debt ceiling standoff was already raising the cost of U.S. debt.

He told MSNBC that a U.S. default would cause the stock market to fall, affecting Americans' retirement savings, and would raise the cost of borowing, saying that a recent bill auction cost the government an extra $80 million in interest payments.

He said government payment systems are not set up to allow payments to be delayed.

"We don't have a Plan B that allows us to meet the commitments that we've made to our creditors, to our seniors, to our veterans, to the American people," Adeyemo said on CNN. "The only plan we have is the one that's worked for more than 200 years in this country, which is the United States of America needs to pay all of its bills and pay them on time."

Reporting by Doina Chiacu and David Lawder; Writing by David Lawder Editing by Doina Chiacu

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