Treasury Secretary Janet Yellen warned on Sunday that it would be a “catastrophe” if Democrats and Republicans fail to raise the debt ceiling, and painted a dire picture of the consequences such a scenario would have on Americans and the US economy.
The Senate voted along party lines last week to raise the federal government’s borrowing limit by about $480 billion but with another showdown expected in December. Senate Minority Leader Mitch McConnell, who approved of the short-term extension, said Democrats will be on their own.
Yellen was asked what would happen if the debt limit isn’t raised.
“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,” she said on ABC’s “This Week,” adding the situation “could result in catastrophe.”
No Republicans voted last Thursday to raise the debt ceiling, but 11 GOP senators voted with Democrats to end debate and allow the measure to proceed to a vote.
McConnell (R-Ky.) joined his GOP colleagues to vote for cloture.
But irked at Senate Majority Leader Chuck Schumer’s fiery speech blasting Republicans for playing a “dangerous and risky partisan game” during negotiations, McConnell said his caucus wouldn’t be there to help in December, meaning Democrats would need 60 votes in the 50-50 divided chamber.
While the Senate passed the legislation, it still needs to be approved by the House before being signed by President Biden.
Despite the dire consequences of failing to raise the debt ceiling in December, Yellen argued against invoking the 14th Amendment’s “public debt clause.”
ABC’s George Stephanopoulos asked Yellen about justifying continued borrowing under the 14th Amendment that states that “‘the validity of the public debt of the United States should not be questioned.’”
“We shouldn’t be in a position where we need to consider whether or not the 14th Amendment applies. That’s a disastrous situation that the country shouldn’t be in,” Yellen said.
The Treasury secretary said she doesn’t want to see the president being put in a scenario in which Congress refused to “let us pay the government’s bills.”
“You know, what should you pay first? … We have to reassure the world that the United States is fiscally responsible, and that they can count on us to pay our bills. And that’s Congress’s job to do that on a bipartisan basis,” she said.
She called on Schumer and House Speaker Nancy Pelosi to “manage this so that we don’t face this situation.”