U.S. Treasury Secretary Janet Yellen on Sunday urged Congress to raise or suspend the nation’s debt ceiling or risk “widespread economic catastrophe.”
In an op-ed column published by the Wall Street Journal, Yellen noted that the U.S. has never defaulted, and said it must not now.
““The U.S. has always paid its bills on time, but the overwhelming consensus among economists and Treasury officials of both parties is that failing to raise the debt limit would produce widespread economic catastrophe.””
— Treasury Secretary Janet Yellen
Sen. Mitch McConnell, R-Ky., has steadfastly refused to to deliver any Republican support to raising the debt limit, leaving Democrats with few options in a Senate that’s split 50-50. Without acting, it is expected that the Treasury will be unable to pay the nation’s bills sometime in October.
On Friday, the White House warned of severe cuts to state and local governments if the federal government defaults.
Congress has raised or suspended the debt limit about 80 times since 1960, Yellen said, and during the Trump administration Democrats agreed three times to suspend the debt ceiling.
The country’s accumulated debt is about $28.4 trillion.
In her op-ed, Yellen warned that defaulting “would likely precipitate a historic financial crisis that would compound the damage of the continuing public health emergency,” resulting in Social Security payments suspended, delays in families’ monthly tax credits and potentially forcing interest-rate hikes that could send stocks plunging.
“There is no valid reason to invite such an outcome,” Yellen wrote. “We are just now emerging from crisis. We must not plunge ourselves back into an entirely avoidable one.”