Treasury Secretary Janet Yellen said Tuesday that the U.S. could slide back into economic recession if Congress fails to raise the debt ceiling by Oct. 18.
“It would be catastrophic to not raise the government’s bills, for us to be in a position where we lacked the resources to pay the government’s bills,” Yellen said in an interview with CNBC. “I fully expect it could cause a recession as well.”
Democrats and Republicans remain at odds over raising the ceiling despite the deadline being less than two weeks away. Republicans, led by Kentucky Sen. Mitch McConnell, have adamantly objected to raising it, and have twice blocked Democrats from doing so.
Senate Republicans last Monday filibustered a government funding bill that included a debt ceiling provision. McConnell then objected days later when Majority Leader Chuck Schumer tried to bring a standalone bill to the floor and get unanimous consent for it to bypass a filibuster and advance with just Democratic votes.
McConnell has not only insisted that Democrats raise the ceiling on their own, but that they lift it by attaching it to their filibuster-proof budget reconciliation bill instead of doing so by passing a separate bill. Democrats, however, have called that option a “non-starter,” and have said that they do not have adequate time to raise it that way.
Republicans’ argument is that Democrats should be responsible for incurring the cost of their spending package, which could total more than $2 trillion. Democrats, however, have countered that they voted to raise the debt ceiling under former President Donald Trump, even as they opposed his 2017 tax cuts that skyrocketed the national debt.
Schumer on Monday said that a bill raising the debt ceiling must land on President Joe Biden’s desk this week, and plans to pressure Republicans into a politically tricky vote Wednesday on the provision. The vote is merely to end debate on the bill, meaning that just 10 Republicans would have to vote in favor for the legislation to overcome a filibuster, but could then vote against it on final passage, where just a simple majority is needed.
Yellen has long warned that failing to raise the debt ceiling could lead to catastrophic economic consequences. In July she warned that the harm facing millions could be “irreparable,” and reminded lawmakers that the nation has never defaulted.
Biden on Monday slammed Republicans for their opposition, calling it “hypocritical, dangerous and disgraceful” and reminding how Trump incurred $8 trillion of debt in just four years. But when Biden was asked if he could guarantee that the nation would avoid defaulting, he gave a blunt response.
“If I could, I would, but I can’t,” Biden said. “That’s up to Mitch McConnell.”
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