Wally Adeyemo (Bloomberg)

Deputy Secretary of the Treasury Wally Adeyemo said on Wednesday that the US Congress' inaction in enabling the US to meet its obligations by raising the debt ceiling is the "greatest threat" to the US economy since the global pandemic.

"The single greatest threat to the progress the American economy has made since the pandemic is Congress’s failure to take action to meet the United States’s obligations," Adeyemo said at the National Asian / Pacific Islander American Chamber of Commerce and Entrepreneurship (National ACE) 2023 Business Summit.

He further warned that failing to raise the debt ceiling would lead up to a recession and would severely impact small businesses and trigger a massive wave of company closures.

"Congress must take action to raise the debt limit and do what is needed to protect families and small businesses, as it has done nearly 80 times before. It is the only way to maintain the economic progress we’ve made," he said.

The U.S. economy is growing with over 200,00 jobs created this past month. If Congress fails to raise the debt limit, we would go into a recession and it would be catastrophic. pic.twitter.com/f7KQIkY6AH
— Deputy Secretary Wally Adeyemo (@TreasuryDepSec) May 15, 2023

Last week, the US Congressional Budget Office warned that if lawmakers fail to raise the amount of debt the country is legally allowed to build up, the US will be faced with a "significant risk" of defaulting within the first two weeks of June.

Earlier in the day, US President Joe Biden said that he is confident an agreement with congressional leaders will be reached regarding the US debt ceiling being raised and that the US government will not default on its financial obligations.

"We are confident that we'll get the agreement on the budget, that America will not default," Biden said. "We're going to come together because there's no alternative to doing the right thing for the country. We have to move on."

This comes after he announced earlier this morning that he will not be attending the Quad meeting in Sydney where he was scheduled to meet with Republicans to discuss raising the debt limit.

Biden said he will be in constant communication with his team while away to attend the G7 summit that will be held in Hiroshima, Japan, from May 19-21.

He added that he will remain in close contact with US House Speaker Kevin McCarthy and with other congressional leaders.

"I'll be in constant contact with my team while I'm at the G7 and I'll be in close touch with [House] Speaker [Kevin] McCarthy and other [congressional] leaders as well," Biden said.