Janet Yellen has spoken of economic catastrophe if the US Congress does not raise the debt ceiling

In a column published today in the financial daily The Wall Street Journal in New York City, Yellen warned that if an increase in debt is not approved, there is a risk that “the government will not be able to pay his bills “.

“Congress has raised or suspended the national debt ceiling about 80 times since 1960. Now it has to do it again. insufficient level and the federal government will not be able to pay its bills, ”Yellen wrote.

The Treasury Secretary described that “the United States has always paid its bills on time, but the overwhelming consensus among economists and Treasury officials on both sides is not to raise the debt ceiling. would produce a generalized economic catastrophe. Within days, millions of Americans could run into cash flow problems. We could see indefinite delays on critical payments. Nearly 50 million older people could stop receiving social security checks for some time. The troops could be left unpaid. Millions of families who depend on the monthly child tax credit could experience delays. The United States, in short, would be in breach of its obligations. “

The official later remarked that “the United States has never failed. Not even once. This would likely precipitate a historic financial crisis that would worsen the damage caused by the lingering public health emergency. Failure to comply could trigger a rise in interest rates, a sharp drop in stock prices and other financial turmoil. Our current economic recovery would turn into a recession, with billions of dollars in growth and millions of jobs lost. “

Yellen insisted that “we can borrow at a lower price than almost any other country, and a default would jeopardize this enviable fiscal position. Mortgage payments, auto loans, credit card bills – anything you buy on credit would be more expensive after you default. “

In another paragraph of his column, Yellen explained that “raising the debt ceiling does not authorize additional spending of taxpayer money. Instead, when we raise the debt ceiling, we accept. effectively increasing the credit card balance. The country’s credit, and in this case 97% of that balance was incurred by previous congresses and presidential administrations. Even though the Biden administration had not authorized any spending, we would still have to tackle the debt ceiling now. Paying the Bills The United States should not be a controversial issue, and during the previous administration Congress suspended the debt ceiling three times with bipartisan support and without much fanfare. For this reason, I have no doubts that our lawmakers will tackle the debt ceiling again, but they must act quickly. “

Finally, the Secretary of the Treasury stressed that “neither delay nor default is tolerable. The past 17 months have tested the economic strength of our nation. We are barely emerging from the crisis. We must not fall back into a totally preventable crisis. “.