(RoyalPatriot.com )- Janet Yellen has been talking about the potential dire consequences that could occur if the United States doesn’t address the debt ceiling and ultimately defaults on its debts.
On Tuesday, the Treasury Secretary refused to outright oppose using budget reconciliation to raise the debt ceiling to avoid that possible default. She warned that not raising the debt ceiling could result in a major recession.
According to Yellen, the “extraordinary measures” the Treasury Department has been using to pay the federal government’s bills will run out on October 18. If the debt ceiling isn’t raised by then, the U.S. will have no way to pay its outstanding obligations.
As she explained to CNBC:
“It would be catastrophic to not pay the government’s bills, for us to be in a position where we lack the resources to pay the government’s bills.
“It’s really up to Speaker [Nancy] Pelosi and [Senate Majority] Leader [Chuck] Schumer to figure out how to get this done in Congress. What I can tell you is that it’s utterly essential that this be done.”
For months, Republicans have been saying that the only way the debt ceiling would be raised is if Democrats pursued doing so through budget reconciliation. CNBC asked Yellen directly whether she supported liberals taking this route.
“I support getting it done.”
She did add, though:
“This has long been done on a bipartisan basis. I believe that both parties have a responsibility to get this done. And it’s really up to the Congress to decide how to manage it. But, I believe it must be done.”
While the two parties remained at an impasse over the debt ceiling, Senate Minority Leader Mitch McConnell did float two other options that would help the country avert defaulting.
McConnell released a statement on Wednesday that said Republicans have “already made it clear” they would “assist in expediting” budget reconciliation. That would allow Democrats to raise the debt ceiling without any support from the GOP.
Thus far, Democrats said they wouldn’t go that route, since they believe it’s too risky and time-consuming.
McConnell alternatively suggested his party “will also allow Democrats to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels into December.”
Democratic leadership has said they are waiting for the proposal to be drafted into official language before they can move forward.
In the meantime, the Senate has postponed voting on a bill the House passed that would suspend the country’s debt limit until December of 2022. Republicans were expected to vote against that bill, anyway.
Democrats might prefer to accept McConnell’s proposal to suspend the debt limit for a few months rather than using budget reconciliation. The latter process would force them to specific an amount to raise the debt limit by, rather than simply suspending it.
Ultimately, that could result in them not being able to pass their massive spending and infrastructure bills through budget reconciliation at a later date.