Treasury Secretary Janet Yellen called on Congress to raise the federal government’s debt limit by December, warning Sunday that inaction could trigger a recession.
The Senate vote on Thursday extended the government’s borrowing power until December – when another showdown between Democrats and Republicans is likely.
If the debt ceiling is not raised again, the consequences would include missed social security payments, non-payment of troops and a potential blow to the country’s credit rating, Yellen said on the show. ABC’s “This Week”.
âThe stake is enormous. Failure to raise the debt ceiling would likely cause a recession and could even lead to a financial crisis, âshe said.
She rejected the suggestion to use the 14th Amendment – which states in part that “the validity of the United States’ public debt … must not be called into question” – to become more indebted.
âIt is the responsibility of Congress to show that it has the determination to pay the bills the government is racking up,â Yellen said. “We shouldn’t be in a position where we have to determine whether the 14th Amendment applies or not.”
Senate Republicans tried to force Democrats to raise the debt ceiling themselves.
Last week, Senate Minority Leader Mitch McConnell, R-Ky., Agreed to let Democrats vote on a short-term extension, but said they should use an obscure procedure called reconciliation for an extension to more. long term in December.
This is a cap on the amount of money the federal government is allowed to borrow.
Congress used to pass steady increases with little drama, but in recent years, budget conservatives have seized the opportunity to voice concerns about government spending.
Meanwhile, Senate Democrats are working to pass a global corporate tax rate that 130 countries agreed to last week.
The deal, which has been criticized by Republicans, would impose a 15% tax on large international companies.
Democrats should try to push the tax through a process of budget reconciliation.
âI am convinced that what we need to do to comply with the minimum tax will be included in a reconciliation package,â Yellen said.
“It is something very important for working Americans to stop what has been a decades-long race to the bottom in corporate taxation.”