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Yellen warns of 'catastrophe' if Congress fails to raise debt ceiling

Treasury Secretary Janet Yellen on Sunday warned the United States would face "catastrophe" if Congress fails to raise the debt ceiling. File Photo by Bonnie Cash/UPI
Treasury Secretary Janet Yellen on Sunday warned the United States would face "catastrophe" if Congress fails to raise the debt ceiling. File Photo by Bonnie Cash/UPI | License Photo

May 8 (UPI) -- Treasury Secretary Janet Yellen has warned Congress that if it doesn't raise the debt ceiling, which it has done dozens of times, the United States will face an economic and financial "catastrophe."

Yellen made the warning during an appearance on ABC News' This Week on Sunday, two days before President Joe Biden is to meet with congressional leaders in the White House to discuss the issue.

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The Biden administration and congressional Republicans have been feuding for months over raising the $31.4 trillion debt ceiling ahead of its June deadline.

Congress has raised the debt ceiling 78 times since 1960, the majority during Republican presidencies including three times during the previous Trump administration.

However, the GOP have sought to use their majority in the House to push back against Democratic spending, an issue that they have tied to raising the United States' debt, while the president and his Democratic Party have been steadfast that the debt ceiling must be raised without conditions to make sure the country's bills are paid.

Last month, House Republicans passed a bill to raise the debt ceiling by $1.5 trillion over the next year, but it was coupled with spending cuts, including for renewable energy tax credits while limiting spending growth to 1% a year over the next decade.

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Yellen said Sunday that Biden on Tuesday will want to set up a process to discuss spending priorities and levels on the budget proposal but that these negotiations "should not take place with a gun really to the head of the American people."

"It is simply unacceptable for Congress to threaten economic calamity for American households in the global financial system as the cost of raising the debt ceiling and getting agreement on budget priorities," she said.

"It they fail to do it, we will have an economic and financial catastrophe that will be of our own making and there is no action that President Biden and the U.S. Treasury can take to prevent that catastrophe," she continued.

The stalemate has prompted speculation that the president may invoke a clause under the 14th Amendment of the Constitution to prevent a default. When asked about that possibility during an interview Friday with MSNBC, Biden replied, "I've not gotten there yet."

Yellen said Sunday that they shouldn't have arrived at the point where they are discussing whether Biden could use the Constitution to issue more debt in the first place, stating if he did invoke that power it would be "a constitutional crisis."

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"There is no way to protect our financial system and our economy other than Congress doing its job and raising the debt ceiling and enabling us to pay our bills," she said.

"I don't want to consider emergency options. What's important is the members of Congress recognize what their responsibility is and avert what will surely be regardless of how it's handled, what option is used to handle it, an economic and financial catastrophe."

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