Treasury Secretary Yellen warns debt ceiling battle could be “disaster”
US Treasury Secretary Janet Yellen warned on ABC’s “This Week” that Minority Leader Sen. Mitch McConnell and the Republicans were playing with “catastrophe” in an ongoing fight to raise the cap. the debt.
As the Senate struck a deal on Thursday for an emergency debt ceiling hike by $ 480 billion to pay the country’s bills through Dec. 3, McConnell warned of a brewing battle for the raise more.
Pressed by “This Week” host George Stephanopoulos on what would happen if McConnell kept his word that Republicans would not help Democrats next time, Yellen painted a picture of drastic consequences.
“Fifty million Americans would not receive Social Security benefits. Our troops will not know when or if they would be paid. Of the 30 million families who receive a child tax credit, these payments would be at risk,” said Yellen.
She said such a scenario “could lead to disaster.”
While no Republican voted to raise the debt ceiling on Thursday, 11 voted with Democrats to break a Republican obstruction so that the measure to raise the debt ceiling can move forward. In the end, the latest measure to temporarily raise the debt ceiling was voted 50-48, with no Republican having voted in favor.
Passage of the measure temporarily avoided a potential government shutdown and default, but sets up a battle between Republicans and Democrats when a more permanent resolution is sought in December.
In a letter to Biden on Friday, McConnell congratulated himself on behalf of Republicans who “filled the leadership void” and helped avert financial calamity by voting to remove the Republican obstruction blocking the temporary measure from the ceiling of the debt. He warned that in December he would be prepared to allow the nation to default on its national debt rather than working with Democrats on a resolution.
Yellen has previously expressed support for removing the debt limit, and Stephanopoulos asked her if she was successful in convincing President Joe Biden to join the position.
“Yes, I support [it]. But it’s up to Congress to decide, ”Yellen said.
Before making the short-term deal to end a debt ceiling deadlock and avoid a US default for the first time, some senators and other supporters bailed out the idea of allowing the Treasury Department to mint a platinum coin of any denomination without congressional approval to ensure the nation’s bills are paid. Under the 2001 law, the coin must be platinum due to Congressional control over gold, silver, nickel, bronze, and copper.
Yellen scoffed at the idea when Stephanopoulos asked why she wouldn’t consider minting a trillion dollar coin.
“I think it’s a gimmick. And it jeopardizes the independence of the Federal Reserve,” Yellen replied. “[The deficit] has been raised almost 70 times since 1965, almost always on a bipartisan basis … I think this should be a shared responsibility, not the responsibility of one party. “
Another possible option to get around the deadlock with Republicans over raising the debt ceiling would be to allow Biden to invoke the Civil War-era 14th Amendment and ignore the legal debt limit.
“Bring the 14th to the table if Congress doesn’t act?” »Stephanopoulos asked the secretary. Stating that “the text is clear enough,” Stephanopoulos read the section of the amendment which reads: “The validity of the US public debt… should not be called into question.
Yellen said: “I don’t think a president had to do this… I can’t imagine being there on December 3rd.”
She said if the debt ceiling was not raised in December, “it would be a self-made crisis that would affect our recovery from the pandemic and would be a self-inflicted injury. We should never be in this. position”.
Yellen has also been asked to weigh in on the ongoing struggle over Biden’s proposed “Build Back Better” infrastructure plan, in the amount of $ 3.5 trillion. She said members of Congress were engaged in discussions on “how best to build a package that would have huge benefits for America.”
“America needs roads, bridges, railroads, infrastructure for the power grid, but also programs that would help children and families succeed, day care centers, community colleges – all difficult choices to make. negotiate, ”Yellen said.
When asked if she and Biden are going to weigh in on the disagreements over the Build Back Better plan, Yellen said, “It’s a healthy compromise right now. I think everyone realizes… it’s a historic opportunity to invest in this country to resolve long-standing structural problems holding back American families. ”
“I think the Democrats will come together, do what is necessary and take this opportunity,” Yellen said.
Yellen also expressed confidence that Congress would approve legislation to include the 15% global corporate minimum tax agreed to by 136 countries in Biden’s spending program. She said the tax “would reassure the world that the United States will do its part.”
“It’s a very historic deal,” Yellen said. “We should be competing on the basis of our strengths, our institutions, and not a race to the bottom that robs countries of the resources we need to invest in our people.”