It comes as Republicans pressure President Joe Biden to strike a deal that will see spending cuts in exchange for an increase in the national borrowing limit, but Yellen insisted the onus is on always to US lawmakers.
“It is simply unacceptable that Congress is threatening economic disaster for American households and the global financial system as the cost of raising the debt ceiling,” she said on an ABC talk show.
Yellen warned on Monday that the United States could run out of funds to meet its financial obligations next June 1.
The US public debt ceiling has been legally set and can only be raised by passing an act in Congress that the President signs.
And in late April, the House of Representatives, led by Republicans bracing for a showdown with President Joe Biden, voted to raise the borrowing limit, but only with drastic cuts to curb what the party sees as spending. excessive.
The bill has no chance of being passed in the Senate, with a slight Democratic majority.
Biden has so far refused to negotiate, pointing out that the debt ceiling has been raised dozens of times over the years, including under former Republican President Donald Trump.
But Republicans insist that Biden’s refusal to discuss the issue is the main obstacle.
“The president refused to negotiate, Senator James Lankford, a member of the Senate Appropriations Committee, told ABC. That was the most exciting part.”
On Tuesday, Biden is scheduled to meet with leaders of both parties in Congress.
Yellen said, “I know he wants to start a process where priorities and spending levels are discussed, but these negotiations shouldn’t be done with a gun pointed at Americans’ heads.”
And the Treasury Secretary dodged questions about whether Biden could use a new interpretation of the U.S. Constitution to keep paying the bills, pointing out that in the absence of congressional action, “there is simply no no good options”.
This impasse has raised the possibility of a first default by the country, with profound implications for the United States and global economies.
Analysts say markets will shake and interest rates will rise permanently, forcing households and businesses to stop spending.
Biden’s economic advisers warn that a default could result in the loss of eight million jobs and result in a 6% drop in gross domestic product.
Since the United States hit its borrowing limit of $31.4 trillion in January, the Treasury Department has taken extraordinary steps to allow it to continue funding government operations.
But as Yellen said on Monday, those measures will soon run out.
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