Treasury Secretary Janet Yellen said there were “simply no good options” for resolving Washington’s debt-limit impasse other than raising the cap by Congress and warned that resorting to the Fourteenth Amendment would lead to a constitutional crisis.
“We shouldn’t get to the point where we need to consider whether the president can continue to issue debt” without Congress raising the debt ceiling, Yellen said Sunday on ABC’s “This Week.”
“This will be a constitutional crisis,” she said.
Constitutional scholars and economists are divided on the idea of the administration continuing to issue debt by citing a provision of the United States Constitution that states that the validity of public debt is “not to be questioned”.
Yellen brushed off many questions about whether Biden might use that option, returning again and again to her insistence that Congress raise the bar.
“All I want to say is that it is the job of Congress to do this,” she said. “If they fail to do so, we will face an economic and financial disaster of our own making, and there is no action that President Biden and the US Treasury Department can take to prevent that disaster.”
It is due to President Joe Biden he meets House Speaker Kevin McCarthy and other congressional leaders Tuesday to discuss the debt ceiling.
Biden and congressional Republicans are locked in over raising the $31.4 trillion borrowing limit, with GOP leaders demanding promises of future spending cuts before agreeing to a higher cap. Biden insisted on a “clean” increase, keeping budget talks separate.
“I don’t want to think about emergency options,” Yellen said Sunday. “What if Congress fails to live up to its responsibility – there are simply no good options.”
The federal government reached its legal maximum borrowing limit in January, and since then the Treasury Department has been using special accounting measures to make cash available. These actions can run out As soon as June 1stYellen told Congress last week.
Biden said Friday that he was not yet ready to invoke the Fourteenth Amendment to avoid breaching the debt ceiling, but he did not rule out possible executive action.
“I’m not quite there yet,” Biden said when asked about the possibility in an interview with MSNBC.
Demanding the amendment seems certain to spark a high-stakes legal battle that threatens to roil the markets. Yellen was dismissive of the idea during the 2021 debt ceiling showdown, saying it would be “catastrophic” if the administration needed to consider it.
On Sunday, it repeatedly sought to shift responsibility to Congress, as the Republican-led House of Representatives in April passed legislation calling for an increase in the debt ceiling by $1.5 trillion — enough to prevent a default through next March 31 — from $4.8 trillion. in budget cuts. Senate Democrats introduced a bill calling for an unconditional increase in the debt ceiling.
“It is simply unacceptable for Congress to threaten economic disaster for American households and the global financial system as the cost of raising the debt ceiling and getting agreement on budget priorities,” Yellen said.