WASHINGTON (AP) – President Joe Biden and Treasury Secretary Janet Yellen on Tuesday warned of a possible economic crisis if an agreement is not reached to raise the national debt ceiling.
They sounded the alarm at speeches before the National Association of Counties, which was holding a conference in Washington.
Biden said many local governments have recovered from the pandemic, but “some in Congress are jeopardizing that progress by threatening America to default on its debt, which would be catastrophic for the counties and the cost it causes.” It’s getting harder to fund important projects in your communities.”
Concerns over the debt ceiling are the result of a political showdown between House Republicans, who are calling for spending cuts, and the Democratic president, who insists on raising the ceiling with no strings attached.
Yellen also warned of a “catastrophe” in her own speech.
“In the long run, a default would increase the cost of borrowing forever. Future investments, including public investments, would become significantly more expensive,” she said.
“Household payments for mortgages, auto loans, and credit cards would increase, and American businesses would see credit markets deteriorate,” she said. “Additionally, the federal government is unlikely to be able to make payments to millions of Americans, including our military families and seniors who rely on Social Security.”
Yellen told Congress last month that the US Treasury Department had taken “extraordinary measures” to avoid a default by the country’s $31.4 trillion credit agency. But the extraordinary measures would likely expire in early June – leaving the US at risk of default.
In a Jan. 13 letter to leaders of the House and Senate, Yellen said her actions will buy time before Congress can pass legislation that either increases or suspends the limit, but she said it’s “crucial that.” Congress acts in a timely manner”.
Biden and Republican House Speaker Kevin McCarthy met at the White House this month to discuss the issue. McCarthy told the president he would not raise the debt ceiling without concessions from Democrats.
“No agreement, no promises, other than that we will continue this conversation,” McCarthy told reporters outside the White House after the meeting.
During his State of the Union address last week, Biden berated Republicans over the debt ceiling — suggesting Republicans want to cut Medicare and Social Security.
Yellen’s comments come ahead of the Congressional Budget Office’s projections released Wednesday, which update the office’s expectation of when the Treasury Department will be unable to fully pay its obligations if the debt ceiling is not raised.
“Let’s not wait until the last minute,” Yellen said. “I believe it is a fundamental responsibility of our nation’s leaders to get this done.”
Fatima Hussein and Chris Megerian, The Associated Press
Don’t miss interesting posts on Famousbio
