China and Russia would likely exploit the “opportunity” a U.S. government debt default would present, Director of National Intelligence Avril Haines warned Thursday.
“It would be almost a certainty” that both countries would “look to take advantage of the opportunity,” Haines told Senate Armed Services Committee members.
She added that Beijing and Moscow could exploit such an event for propaganda purposes through “information operations,” using it as evidence that the U.S political system is chaotic, “that we’re not capable of functioning as a democracy.”
Though she couldn’t give an assessment of the outcome of the financial markets, she said that a default would “almost certainly” create global uncertainty about the value of the U.S. dollar, leadership and institutions, “leading to volatility [in] currency and financial markets and commodity markets that are priced in dollars.”
The Biden administration is in the midst of a political standoff over increasing the U.S. debt limit, with Speaker Kevin McCarthy (R-Calif.) and his Republican colleagues maintaining that raising the debt ceiling go hand-in-hand with cuts in spending.
The administration, meanwhile, has said there will be no debt limit negotiations.
If the U.S. government does not vote to raise the debt ceiling by June, the country could risk defaulting on its debt.
Asked at the daily White House press briefing about Haines’s comments, Shalanda Young, director of the Office of Management and Budget, said she agreed, adding that Moscow and Beijing “love to see chaos in the American system. They love to see that we can’t do our basic jobs.”
“Does democracy still work or does the Chinese way work? And things like this we have to step up to the plate and do what’s right for the American people,” Young said.
Haines also testified on the recent online leak of hundreds of pages of classified Pentagon documents, calling it “extremely frustrating, obviously, and demoralizing for folks in the intelligence communities who work so hard, frankly, to put together the kind of intelligence that then gets disclosed in leaks.”
Jack Teixeira, a 21-year-old Massachusetts Air National Guardsmen, was arrested in April for allegedly leaking the intelligence documents.
Haines added that the investigation into the leak is ongoing, but that the “damage that it does to our national security is just unacceptable on every level.”
—Updated at 2:10 p.m. Alex Gangitano contributed.