US faces a recession if Congress doesn’t address the debt limit: Treasury secretary
US Treasury Secretary Janet Yellen has said she believes the economy would fall into a recession if Congress fails to raise or suspend the debt limit before the country defaults on trillions of dollars of debt.
“I do regard Oct. 18 as a deadline. It would be catastrophic to not pay the government’s bills, for us to be in a position where we lacked the resources to pay the government’s bills,” Yellen said during an interview on Tuesday.
“I fully expect it would cause a recession as well,” Yellen added, a day after US President Joe Biden accused Senate Republicans of taking a "reckless" position in refusing to join Democrats in voting to raise the government's $28.4 trillion (28,400 billion) debt limit.
Biden called on Congress to raise the debt limit this week and avoid even approaching economic turmoil.
Meanwhile, US Senate Majority Leader Chuck Schumer has said Congress must get a bill raising the debt ceiling to Biden's desk by the end of the week, or else the United States could default which could be disastrous for the economy and devastating to American families
Senate Republicans have twice in recent weeks blocked action to raise the debt ceiling. They say Democrats can use a parliamentary maneuver known as budget reconciliation to act alone, while senior Democrats have rejected using that approach.
The Treasury secretary has for weeks warned Schumer and House Speaker Nancy Pelosi that the US will no longer be able to honor its debts around Oct. 18. Lawmakers must raise or abolish the debt ceiling before that date or risk the first-ever US default.
Last week, Yellen told lawmakers that the US would default by October 18 without action to raise the debt ceiling.
“At that point, we expect the Treasury would be left with very limited resources that would be depleted quickly. It is uncertain whether we could continue to meet all the nation's commitments after that date,” Yellen said.
Congress has so far failed to raise America’s $28.4 trillion debt ceiling amid a standoff between Democrats and Republicans, who have refused to support raising or suspending the current ceiling.
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