Treasury Secretary Yellen warns debt ceiling battle could spell ‘catastrophe’

U.S. Treasury Secretary Janet Yellen warned on ABC’s “This Week” that Sen. Minority Leader Mitch McConnell and Republicans are taking part in with “catastrophe” over a pending combat to boost the debt ceiling.

While the Senate reached a deal on Thursday for an emergency hike of the debt ceiling by $480 billion to pay the nation’s payments by way of Dec. 3, McConnell has warned of a battle brewing over elevating it additional.

Pressed by “This Week” anchor George Stephanopoulos about what would occur if McConnell retains his phrase that Republicans will not assist the Democrats subsequent time, Yellen painted an image with drastic penalties.

“Fifty million Americans wouldn’t receive Social Security payments. Our troops won’t know when or if they would be paid. The 30 million families that receive a child tax credit, those payments would be in jeopardy,” Yellen mentioned.

She mentioned such a situation “could result in catastrophe.”

While no Republicans voted on Thursday to boost the debt ceiling, 11 voted with Democrats to interrupt a Republican filibuster so the measure to boost the debt ceiling could advance. In the top, the ultimate measure to briefly elevate the debt ceiling handed by a vote of 50-48 with no Republicans voting in favor.

Passage of the measure briefly staved off a possible authorities shutdown and default however units up a battle between Republicans and Democrats when a extra everlasting decision is sought in December.

In a letter to Biden on Friday, McConnell took credit score on behalf of Republicans who “filled the leadership vacuum” and helped dodge monetary calamity by voting to take away the Republican filibuster stalling the non permanent debt ceiling measure. He warned that come December, he can be keen to permit the nation to default on its nationwide debt reasonably than work with Democrats on a decision.

Yellen has beforehand expressed assist for eliminating the debt restrict and was requested by Stephanopoulos if she has been capable of persuade President Joe Biden to get on board with that place.

“Yes, I support [it]. But it’s up to Congress,” Yellen mentioned.

Before reaching the short-term deal to finish a debt ceiling standoff and avert a U.S. default for the primary time, some senators and different proponents refloated the thought of permitting the Department of Treasury to mint a platinum coin of any worth with out congressional approval to make sure the nation’s payments are paid. Under the 2001 legislation, the coin should be product of platinum due to Congress’ management over gold, silver, nickel, bronze and copper.

Yellen scoffed on the thought when Stephanopoulos requested why she wouldn’t contemplate minting a trillion-dollar coin.

“I think it’s a gimmick. And it jeopardizes the independence of the Federal Reserve,” Yellen responded. “[The deficit] has been raised almost 70 times since 1965, almost always on a bipartisan basis … I believe it should be a shared responsibility, not the responsibility of any one party.”

Another potential choice to bypass the stalemate with Republicans over elevating the debt ceiling can be to permit Biden to invoke the Civil War-era 14th Amendment and ignore the statutory debt restrict.

“Is invoking the 14th on the table if Congress doesn’t act?” Stephanopoulos requested the secretary. Saying the “text is pretty clear,” Stephanopoulos learn the part of the modification which states, “The validity of the public debt of the United States… should not be questioned.”

Yellen mentioned, “I don’t think any president has had to do that … can’t imagine being there on Dec. 3.”

She mentioned if the debt ceiling just isn’t raised in December “this would be a self-manufactured crisis that affects our recovery coming out of the pandemic and would be a self-inflicted wound. We shouldn’t ever be in that position.”

Yellen was additionally requested to weigh in on the continued combat over Biden’s proposed $3.5 trillion “Build Back Better” infrastructure plan. She mentioned members of Congress are engaged in discussions over “the best way to construct a package that would have huge payoffs for America.”

“America needs roads, bridges, railroads, infrastructure for the electric grid, but also programs that would help children and families succeed, child care, community colleges — all hard choices to negotiate,” Yellen mentioned.

Asked whether or not she and Biden are going to weigh in on disagreements over the Build Back Better plan, Yellen mentioned, “This is a healthy give and take right now. I think everyone realizes … this is a historic opportunity to invest in this country to address long-standing structural problems that have been holding back American families.”

“I believe that Democrats will come together and do what’s necessary and take advantage of this opportunity,” Yellen mentioned.

Yellen additionally expressed confidence that Congress will approve laws to incorporate the 15% world company minimal tax agreed to by 136 nations in Biden’s spending package deal. She mentioned the tax would “reassure the world that the U.S. will do its part.”

“This is a very historic agreement,” Yellen mentioned. “We should be competing on the basis of our strengths, on our institutions, not a race to the bottom that deprives countries of the resources we need to invest in our people.”



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