Susan Walsh/AP
- Elon Musk has warned that a US debt default appears "increasingly possible."
- Government officials are scrambling to reach a deal to raise the debt ceiling.
- Treasury Secretary Janet Yellen has cautioned the US could run out of money as early as June 1.
There's a growing risk that the US government will default on its debt, Elon Musk has warned.
A Twitter user, Whole Mars Catalog, wrote that "defaulting on the national debt is a bad idea" in a recent tweet. Musk — the CEO of Tesla, SpaceX, and Twitter — replied with two worrying words: "Increasingly possible."
There's mounting concern on Wall Street that America could fail to repay money it owes and send shockwaves through the global financial system. Lawmakers have been sparring over whether to raise the debt ceiling or not, with House Speaker Kevin McCarthy recently proposing a bill that would lift the borrowing limit by $1.5 trillion while cutting spending by $4.5 trillion.
On Tuesday, President Joe Biden met with congressional leaders to discuss an increase in the cap on government borrowing. It was the first meeting Biden had with McCarthy after months of political deadlock. However, McCarthy said the discussions proved fruitless.
Treasury Secretary Janet Yellen has repeatedly urged lawmakers to act on the debt limit – and warned that failing to raise the debt ceiling in time could result in a "catastrophe" for the US economy. She even warned the US might begin defaulting on its debts as early as June 1.
Musk's warning strikes a contrast to Berkshire Hathaway chief Warren Buffett's comments during his company's annual shareholder meeting on Saturday. He dismissed the idea that US authorities would allow American depositors to lose money in a bank failure, or refuse to allow more government borrowing.
"That is not how the US is going to behave, any more than they're going to let the debt ceiling cause the world to go into turmoil," he said.