With U.S. Treasury Secretary Janet Yellen’s June 1 default deadline kickstarting the U.S. debt ceiling talks again, RBC Wealth Management warned that this year's political and economic backdrop is"one of the most challenging."
Yellen said Monday that the U.S. could run out of money to pay its bills by June 1 if Congress fails to raise or suspend the debt ceiling. A U.S. default is not a realistic scenario, but much damage can be done during the negotiation process, including adverse effects on economic growth. The second scenario is a"bad" outcome — if the debt ceiling gets raised within two weeks of the X-date. This would be a repeat of the 2011 debt ceiling debacle when the debt limit was lifted last minute.
And the third and worst-case scenario would be the use of a non-legislative action to avoid default. The clause states:"The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary's discretion, may prescribe from time to time."