Treasury Secretary Janet Yellen said Sunday there were “no good options” for the United States to avoid economic “disaster” if Congress failed to raise the nation’s $31.381 trillion borrowing limit in the coming weeks. She didn’t rule out President Joe Biden bypassing lawmakers and acting on his own to try to stave off a first-ever federal default.
Her comments added urgency to a high-profile meeting Tuesday between Biden and congressional leaders from both parties.
Democrats and Republicans are at odds over whether the debt ceiling should be negotiated at all. GOP lawmakers, led by California House Speaker Kevin McCarthy, are demanding spending cuts in exchange for raising the borrowing limit, while Biden said the threat of a default should not be used as a bargaining chip in budget talks.
Yellen, who was interviewed on ABC’s This Week, painted a bleak picture of what could happen if the credit limit isn’t increased before the Treasury Department has “extraordinary measures” to operate below the current limit. That time, she said, is likely to come in early June, perhaps as early as June 1st.
“Whether it’s interest payments made on the debt or payments made to Social Security recipients or to Medicare providers, we just wouldn’t have enough cash to meet all of our obligations,” she said. “And there is broad agreement that financial and economic chaos would ensue.”
Raising the debt limit would not allow new federal spending. It would only allow borrowing to pay for what Congress has already authorized.
Biden’s White House meeting with McCarthy, House Minority Leader Hakeem Jeffries, DN.Y., Senate Majority Leader Chuck Schumer, DN.Y., and Senate Minority Leader Mitch McConnell, R-Ky., will do that be the first substantive conversation between Biden and McCarthy in months.
House Republicans passed legislation on April 26 that would raise the debt limit but make significant cuts in federal spending. However, those cuts are unlikely to win the support of all Republicans in the Democrat-controlled Senate, and Biden said he will not negotiate state spending until Congress takes the risk of a default off the table.
Arizona Senator Kyrsten Sinema, an independent who left the Democratic Party in December, encouraged Biden and McCarthy to meet halfway.
“There’s not going to be just a simple clean debt ceiling — there are no votes for that,” she told CBS’s Face the Nation. “The sooner these two guys come into the room and listen to what the other needs, the more likely they are to solve this challenge and protect the full trust and credit of the United States of America.”
Yellen was asked on ABC if Biden could sidestep Congress by citing the 14th Amendment that says the “validity” of the US debt “shall not be called into question.” Yellen didn’t answer definitively, but said it shouldn’t be taken as a valid solution.
“We shouldn’t get to the point where we have to consider whether the president can continue to issue debt. That would be a constitutional crisis,” she said.
“What to do when Congress fails to meet its responsibilities? There just aren’t any good options,” she added.
Sen. James Lankford, R-Okla., agreed on the risks of invoking the 14th Amendment. He told ABC that the Constitution “is very clear that spending — all these details about spending and money actually have to get through Congress.”
He has criticized Biden for not being willing to negotiate spending cuts and argued the debt ceiling exists to force a broader conversation about government spending. “It’s not just about debt,” the senator said. “But it also increases the limit of what we can continue to add.”
The 14th Amendment issue was investigated by Obama administration attorneys during the 2011 debt limit showdown, which informed Biden’s refusal to now negotiate with Republicans on a debt limit increase. At the time, Justice Department lawyers said they did not believe the president had the unilateral authority to issue new debt.
Asked about the 14th amendment proposal in an interview with MSNBC on Friday, Biden said, “I haven’t gotten there yet.”
Ohio Republican Mike Turner, chairman of the House Intelligence Committee, and the committee’s top Democrat, Connecticut Rep. Jim Himes, told CNN’s State of the Union that the debt limit debate poses a threat to national security.
“The Russians and the Chinese would try to take advantage of it,” Himes said. “The United States has never really come close to debt. So it’s hard for us to imagine what that might look like.”
Turner argued that Biden would bear primary responsibility. “I think if the president doesn’t negotiate with Congress and continues to spiral out of control, which threatens our economy, that’s a national security threat,” he said.
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