Yellen warns of hopelessness of raising debt limit
2023.01.28 02:47
Yellen warns of hopelessness of raising debt limit
By Kristina Sobol
Budrigannews.com – According to Treasury Secretary Janet Yellen, the only way to avoid a US default crisis is for Congress to raise the federal debt limit and not take part in any other proposed “stopgap” measures, such as spending cuts or short-term extensions.
She stated in an interview on Thursday, “It’s overly necessary for Congress to raise the debt limit, and I hope they do so in a timely manner before we come to a crisis.” She said, “I’m not going to comment on rumors about what they are or are not considering,” referring to a plan that House Republican leaders are considering to extend the deadline for raising the federal debt ceiling until September 30.
With the stability of global financial markets and the US economy in jeopardy, Democrats and Republicans are still at odds over the government’s legal debt limit.
Yellen has consistently refuted the idea that Democrats should accept Republican demands for spending cuts in exchange for raising the ceiling as a compromise. She has also rejected arguments that the Treasury ought to prepare for technical measures that would lessen the impact of a default or use tricks like minting a $1 trillion coin.
However, the administration of President Joe Biden may not have the support of the general public. According to a recent Harris Poll survey, 66% of respondents believed Republicans should only raise the ceiling after negotiating with Democrats to limit their future spending.
The Obama administration considered prioritizing debt interest payments over other obligations during the debt-ceiling crisis of 2011. Five years later, transcripts of discussions on the plan at the Federal Reserve’s Open Market Committee became public.
That plan was never agreed upon, according to the Treasury secretary, who was the Fed vice chair at the time.
She stated:
“We do talk about what kinds of things are feasible, but even there, you have no guarantees that would work if you look at the FOMC discussion of that.”
The debt of the federal government cannot exceed $31.4 trillion under the law, which was established on January 19. The Treasury has stated that it can withstand the situation through the use of special account maneuvers at least until the beginning of June; however, if the limit isn’t raised after that, it could default on payments at any time.
She stated:
“I think we feel strongly it will be a disaster not to raise the debt ceiling.”
