Janet Yellen told Congress she would support the removal of the debt ceiling

• Treasury Secretary Janet Yellen said on Thursday that she would support the removal of the debt ceiling.
• Yellen recently said the government must raise the debt ceiling by October 18.
• The House has passed a bill to suspend the debt ceiling, but the Senate is likely to block it.

Amid the crisis over whether the U.S. government will be able to pay its bills in about three weeks, Treasury Secretary Janet Yellen has said she will support removing the debt ceiling.

Yellen was questioned Thursday before the House financial services committee whether she would support the removal of the debt ceiling, which sets a hard cap on the amount of money the federal government is allowed to borrow. In short, she said yes and called the law “very destructive”.

Yellen’s response underscored the fundamental tension between Congress authorizing the spending and the need to then separately authorize the borrowing needed to pay for those expenses.

“I think when Congress makes spending laws and puts in place a tax policy that determines taxes, those are the critical decisions Congress makes,” Yellen said. “And if in order to fund these tax expenditures and decisions it is necessary to issue additional debt, I think it is very destructive to put the president and myself, the secretary of the treasury, in a situation where we could being unable to pay the bills that result from these recent decisions. “

Other treasury secretaries have also advocated getting rid of the law. Treasury Secretary Tim Geithner said in 2012 – between the two Obama-era debt ceiling fights – that “it would have been time to get rid of it long ago.” In 2013, The Washington Post assembled a long list of leading economic and political leaders in favor of abolishing the debt ceiling, including former Treasury Secretaries Robert Rubin, Larry Summers and Paul O’Neill.

Yellen said in a letter Tuesday that the government would be cash-strapped by October 18 if the debt ceiling was not raised or suspended.

“At this point, we expect the treasury to end up with very limited resources which will quickly run out,” the letter said. “It is not certain that we can continue to meet all of the nation’s commitments after this date.”

Yellen has previously expressed that not raising the limit could be a serious problem, threatening the US economy and the dollar’s global position.

“I see nothing more detrimental to the role of the dollar than not raising the debt ceiling,” Yellen previously said.

The House passed a bill intended to both suspend the debt ceiling and prevent a government shutdown, but the Senate blocked it. A separate bill aimed only at raising the debt ceiling was passed by the House on Wednesday, but it will also likely be defeated when it reaches the Senate.