Larry Summers Says June 1 Debt Ceiling Deadline Unwelcome, Not Unexpected: 'Have To Rely On Fear To Do The Work Of Reason'

Former Treasury Secretary Lawrence Summers reportedly said the new debt ceiling deadline of June 1 is unwelcome, but not unexpected and that "we just have to rely on fear to do the work of reason."

What Happened: "We knew that this day would come. We have seen for the last few weeks tax collections running below expected. And so the Secretary has done what any responsible official in her position would do, which is warn that it’s possible, that we are going to hit that debt constraint sooner than most people were thinking of — by June 1st. But in some sense, it doesn’t matter exactly when the crunch moment comes," Summers told CNN.

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In the latest development, President Joe Biden has called House Speaker Kevin McCarthy to invite him to a May 9 White House meeting and has also summoned the four top congressional leaders next week following the Treasury's warning about running short of cash to pay bills.

Summers also said it would be a catastrophe for the U.S. to default while citing some major nations that have never failed to make their payments.

“China has never defaulted. Other countries we compete with have never defaulted. So, this is something we have to avoid and we just have to rely on fear to do the work of reason and our officials to come forward on some formula in which we do not let the credit-worthiness of the United States be taken hostage by anyone for any reason," Summers said.

Serious Demonstration: According to Summers, there is some serious demonstration in Washington indicating that the debt issue is one that’s going to be taken seriously at this critical time.

This seems apparent given that President Biden has also extended invitations to House Democratic leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Republican leader Mitch McConnell apart from McCarthy.

Summers expressed optimism that the two most experienced players in the drama, President Biden and Senator McConnell, who have been colleagues in the Senate for a long time and have worked together successfully in the past, will find a way together to tackle the crisis.

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