US will never default on its debt, claims Trump's Treasury Secretary

Yahoo

2 days ago

The US will never default on its debts, Donald Trump's Treasury Secretary has claimed, as he sought to downplay growing concerns over the state of the country's public finances.
Scott Bessent told CBS news on Sunday that the US was 'on the warning track' but insisted it would not run out of cash despite approaching the so-called debt ceiling – the legal limit that the US government is permitted to borrow.
He said: 'I will say the United States of America is never going to default. That is never going to happen. We are on the warning track and we will never hit the wall.'
Economists have warned that Donald Trump's 'big, beautiful' spending bill will add trillions to the US's $37 trillion (£27.4 trillion) federal deficit over the next decade.
The bill, which was approved by the US's House of Representatives last month, proposes raising the US debt ceiling to $4 trillion. It promises increased spending on the US military and a clampdown on illegal immigration alongside cuts to food aid, clean energy tax credits and Medicare, America's healthcare programme for poorer households.
The US has already been downgraded by three major credit rating agencies in part owing to concerns over Mr Trump's policies and slowing economic growth across the Atlantic.
In early May, Mr Bessent said there was a 'reasonable probability' that the US could run out of money by August without lifting the debt ceiling.
Mr Bessent's comments come after Jamie Dimon, the chief executive of JPMorgan, warned last Friday that Donald Trump's financial plans could 'crack' the American bond market. Investors have become increasingly worried over the impact of Mr Trump's borrowing plans on US Treasuries.
Mr Dimon said: 'I just don't know if it's going to be a crisis in six months or six years, and I'm hoping that we change both the trajectory of the debt and the ability of market makers to make markets.'
Mr Bessent hit back at Mr Dimon, saying: 'I've known Jamie for a long time, and for his entire career he's made predictions like this. Fortunately none of them have come true. That's why he's a great banker. He tries to look around the corner.
'We are going to bring the deficit down slowly. This has been a long process, so the goal is to bring it down over the next four years.'
He argued that the US was taking in a 'substantial tariff income' that could net the US government as much as $2 trillion, and pointed to plans for a clampdown on prescription drug prices.
He said: '[The] president has a prescription drug plan with the pharmaceutical companies that could substantially push down costs for prescription drugs, and that could be another trillion.'
Mr Bessent also said he was confident that Donald Trump and the Chinese president, Xi Jinping, would 'iron out' their difficulties in a call soon – following accusations from Mr Trump last week that Beijing had violated a truce on tariffs agreed in May.
He said: '[Mr Trump] is going to have a wonderful conversation about the trade negotiations this week with President Xi. That's our expectation.'