Janet Yellen is worried about 'irreparable harm' to the economy if Congress doesn't raise the debt limit. Her warning is ringing hollow among Senate Republicans.
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Treasury Secretary Janet Yellen is continuing to warn of "irreparable harm" without a debt limit hike.
The past debt limit expired on July 30, leading the department to take "extraordinary measures" to pay the government's bills.
Democrats aren't including a debt ceiling hike in their party-line $3.5 trillion budget package.
Treasury Secretary Janet Yellen on Monday warned congressional leaders that a failure to raise the federal debt ceiling will cause "irreparable harm" to the economy as Congress barrels towards the deadline to fund the government and a potential spending battle.
"In recent years Congress has addressed the debt limit through regular order, with broad bipartisan support," Yellen said in an August 9 statement. "In fact, during the last administration, Democrats and Republicans came together to do their duty three times. Congress should do so again now by increasing or suspending the debt limit on a bipartisan basis."
Yellen also made the same point in a July 23 letter to congressional leaders, calling for a debt ceiling hike through "regular order" - not through budget reconciliation. That's the pathway for some legislation to be fast-tracked with a simple majority of 51 votes instead of the usual three-fifths majority needed to pass most legislation under the current Senate filibuster rules.
Such a move won't authorize more government spending, but will allow the Treasury Department to pay for existing expenditures and debts, she said.
"Failure to meet these obligations would cause irreparable harm to the US economy and the lives of all Americans," Yellen warned House Speaker Nancy Pelosi.
The previous debt limit suspension expired on July 30, prompting the Treasury Department to take "extraordinary measures" to help pay off the government's bills. Yellen has said economic uncertainty stemming from the pandemic is making it difficult to project when Treasury will exhaust its ability to keep the government afloat. The Congressional Budget Office forecasts Treasury can keep the government afloat until October.
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Senate Democrats introduced a $3.5 trillion spending blueprint on Monday to expand healthcare, education, childcare, and combat climate change with new taxes on the wealthiest Americans and large firms.
The 92-page budget resolution, released on Monday morning, doesn't include a debt limit hike, confirming earlier reporting from Politico and other outlets that Democrats wouldn't raise the debt ceiling in reconciliation.
With the Senate divided between 50 Democrats and 50 Republicans, at least 10 GOP senators will need to get on board with raising the debt ceiling . By not addressing the debt limit in their party-line budget package, Democrats are setting the stage for a showdown with Republicans over keeping the federal government up and running.
If the two parties can't agree on raising the debt ceiling by September 30, it could lead to a government shutdown and the US defaulting on its loans. The latter scenario, experts say, could wreak economic chaos.
A previous government shutdown in 2011 that ensued over a budget fight between former President Barack Obama and congressional Republicans led to the US's credit rating being downgraded.
Politico reported that the alternate course of action for Democrats is to seek a debt limit hike in a standalone bill or, more likely, as part of a continuing resolution to fund the government.
Yellen's pleas, however, is ringing hollow among Senate Republicans so far. Minority Leader Mitch McConnell says Republicans won't strike a deal to raise the debt ceiling with Democrats, despite having done so under former President Donald Trump.
"Democrats want Republicans to help them raise the debt limit so they can keep spending historic sums of money with zero Republican input and zero Republican votes," McConnell said in a Senate floor speech on Monday. "So imagine a friend tells you he's flying off to Las Vegas to blow all of his money. He doesn't care that you think it's irresponsible. You aren't invited to come along. But he wants you to cosign a loan for him before he leaves."
Other Senate Republicans are firmly objecting to cooperating with Democrats as well. "Democrats are going on an out-of-control spending spree so they need to raise the debt ceiling to accommodate all the debt we're going to incur to pay for their massive spending," Sen. Pat Toomey of Pennsylvania told Insider.
"They own it," Sen. Bill Cassidy of Louisiana said in an interview. "They control it. They got control of the White House, they got control of the Senate, they got control of the House. They don't need our help."
Read the original article on Business Insider
