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Debt Limit

Yellen Warns Of Crisis If Congress Won’t Raise Debt Limit



US dollars sandwiched in an old vice, toned | Yellen Warns Of Crisis If Congress Won’t Raise Debt Limit | featured

On Sunday, US Treasury Secretary Janet Yellen warned of catastrophe if Congress will not raise the debt limit. Once the temporary measure Congress passed to avert the debt ceiling issue last week expires December 3, lawmakers need to step up again.  

RELATED: US Senate Approves Debt Ceiling Extension Until December

US Approaches Debt Limit, Will Need to Raise It Before December 3

The web page of debt limit is seen on the U.S. Department of the Treasury website-debt limit

Yellen appeared on ABC’s “This Week” to talk about the looming debt limit. While she warned of catastrophic failure if nothing happens by December 3, she expressed confidence that Congress will act.

Besides, it will be US lawmakers' responsibility to raise the federal debt limit. She then expressed confidence that Congress would do so before their temporary fix runs out. 

“Once Congress and the administration have decided on spending plans and tax plans, it's simply their responsibility to pay the bills that result from that,” Yellen said. “It's a housekeeping chore. Because really, we should be debating the government's fiscal policy,” she added. 

Senate Republicans Helped Approve A Temporary Fix

Following weeks of tussles between Democrats and Republicans over the debt limit, the Senate approved a temporary measure Thursday. This allowed the United States to avoid defaulting on debts for its payments until December 3. The approved fix covers payment for all programs Congress approved. 

Needing a majority vote, Democrats had to turn to their rivals for support. They needed at least 10 Republican votes to add to their 50 party votes. Senate Minority Leader Mitch McConnell (R-KY) obliged the Democrats by supporting the bill.

He and 10 other Republicans helped avert a crisis by lending support to a temporary fix. This fix raised $480 billion to the debt limit. However, the increase is only good to keep the US government running until December 03. 

McConnell Vows GOP Won’t Aid Democrats In Raising Debt Limit

Last Friday, McConnell wrote President Joe Biden and warned him that the GOP won’t help raise the debt limit again. Despite the letter, Yellen said she remains confident the government will do something.

“I don't believe any president has ever had to make a decision about what they would do if Congress failed to raise the debt ceiling. I can't imagine our being there on December 3rd,” she remarked.

The Treasury Secretary said she believes that the Democratic leaders can pull off the feat. In fact, Yellen knows that House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer, “will be able to manage this so that we don't face this situation.”

Invoking the 14th Amendment

In addition, Yellen ruled out the need to invoke the 14th Amendment. Some Democrats are looking into the argument that they can use the 14th Amendment to invalidate the debt ceiling.

Accordingly, section four of the amendment provides that the “validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion” shall remain above reproach.

However, Yellen believes that invoking this would only result in a lengthy legal battle that can eventually end at the Supreme Court. 

Meanwhile, congressional Democrats continue to hammer on President Joe Biden's sweeping social safety net plan. However, Democrats are wrangling among themselves on how much to include in the bill.

Holdover Democrats like Senator Joe Manchin (WV) continue to push for a smaller bill. Yellen suggested a compromise by means-testing some of the programs.

“There is a trade-off there. We know that programs that are universal have tended to be long-lasting and very popular. But there is also an argument for, you know, making sure that the highest-income Americans perhaps don't get the benefit of a program that is most needed by those with lower income,” she added. 

Watch the Reuters video reporting that Treasury Secretary Janet Yellen is confident Congress will raise the debt ceiling:

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