Treasury Secretary on Debt Ceiling Debate: “It’s flirting with a self-inflicted crisis”

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“It is important that we met that deadline and that we didn’t go, you know – it looks like it will be voted on tonight – that we didn’t go directly against the wire. But we have to sort it out longer. term, “Yellen told CNN’s Erin Burnett on” OutFront. “

“You know what we’re really talking about here is you can count on the government to pay its bills?” It is not about future expenses or taxes. We have incurred invoices. Can we count on the government to pay these bills? And Americans, whether they’re people waiting for a Social Security check or military pay, or bondholders who see U.S. Treasuries as the safest asset in the world, they should never wonder if the United States will pay its bills. “

His comments came hours before the Senate voted Thursday night to extend the debt limit until early December. The House must now approve the deal before it can be sent to President Joe Biden for signature.

Yellen warned lawmakers for weeks that there would be catastrophic consequences if the borrowing limit was not raised. “A delay that calls into question the federal government’s ability to meet all of its obligations would likely cause irreparable damage to the US economy and global financial markets,” she wrote in a letter to Congress last month.

On Thursday, Yellen suggested that it was becoming “more and more damaging” to even set a debt ceiling. “This has led to a series of politically dangerous conflicts that have left Americans and world markets questioning whether or not America is serious about paying its bills,” she said, calling it ” impossible situation “.

“Congress needs to debate these issues when it decides spending and taxation, and no, every several years, stop for good and say, ‘Well, now we’re not going to let the Secretary of the Treasury paying the nation’s bills, ‘”she continued.

The Treasury Secretary also pushed back against criticism that the president’s legislative priorities, including the bipartisan infrastructure bill and the reconciliation package, would result in additional debt, saying: “It’s all paid.”

“This is not deficit spending, it is a revenue increase package that will fully cover the cost of those expenses,” Yellen said. “So you know what, people can have different opinions on the value of the package and if they support it. I’m strongly in favor, because I think that’s what this economy needs to be more productive, grow faster, be a fairer economy. “

This story was updated with further developments on Thursday.

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