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Treasury Secretary Janet Yellen calls for permanent end to debt limit

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Treasury Secretary Janet Yellen calls for permanent end to debt limit
Janet Yellen, U.S. treasury secretary, speaks during a House Financial Services Committee hearing in Washington, D.C., on Thursday. Pool Photo by Al Drago/UPI | License Photo

Sept. 30 (UPI) -- Treasury Secretary Janet Yellen called for an end to the federal debt ceiling altogether Thursday and shot down lawmakers' idea of minting a $1 trillion coin to avoid defaulting on the debt.

She described the debt limit as "very destructive" during testimony before the House Committee on Financial Services. The hearing comes amid debate in Congress on whether to raise the debt ceiling before the U.S. government runs out of money.

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"When Congress legislates expenditures and puts in place tax policy that determines taxes, those are the crucial decisions Congress is making," Yellen said.

"And if to finance those spending and tax decisions, it's necessary to issue additional debt, I believe it's very destructive to the president and myself, the treasury secretary, in the situation where we might be unable to pay the bills that result from those past decisions."

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Asked by Rep. Sean Casten, D-Ill., if she supports repealing the national debt ceiling, Yellen responded: "Yes, I would."

Yellen warned Congress on Tuesday that the U.S. government will run out of money to pay its bills by Oct. 18 if the debt limit isn't increased.

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"I think it would be catastrophic for the economy and for individual families," if Congress failed to raise the debt ceiling and the United States defaulted, Yellen said.

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Asked about some lawmakers' proposal to take the extreme step of minting a $1 trillion platinum coin to deposit into the Federal Reserve to avoid defaulting, Yellen shut down the idea.

"I believe that the only way to handle the debt ceiling is for Congress to raise it and show the world, financial markets and the public that we're a country that will pay our bills," she said.

A measure to raise the debt limit was initially tied to a continuing resolution to fund the U.S. government through December in recent negotiations. Lawmakers split the two issues Wednesday after it was clear Republicans would not vote in favor of raising the debt ceiling, threatening a government shutdown.

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The Senate voted Thursday in favor of a stopgap funding measure, and the House was expected to follow suit.

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