WASHINGTON — Treasury Secretary Janet Yellen said Sunday there are “no good options” for the United States to avoid economic “calamity” if Congress fails to raise the nation’s debt limit to $31.381 trillion in the coming weeks. . She did not rule out President Joe Biden bypassing lawmakers and acting on their behalf to try to prevent a first-time federal default.
His comments added even more urgency to a high-stakes meeting Tuesday between Biden and congressional leaders from both parties.
Democrats and Republicans disagree on whether the debt limit should be up for negotiation. Republican lawmakers, led by House Speaker Kevin McCarthy of California, are demanding spending cuts in exchange for raising the debt limit, while Biden has said the threat of default should not be used as leverage in budget talks.
Yellen, interviewed on ABC’s «This Week,» painted a dire picture of what could happen if the borrowing limit is not increased before the Treasury Department runs out of what it calls «extraordinary measures» to operate under the current limit. . That time, she said, is expected to come in early June, perhaps as early as June 1.
«Whether it’s defaulting on interest payments that are made on the debt or payments to Social Security recipients or to Medicare providers, we simply wouldn’t have enough cash to meet all of our obligations,» he said. “And it is widely accepted that financial and economic chaos would ensue.”
An increase in the debt limit would not authorize new federal spending. It would only allow borrowing to pay for what Congress has already approved.
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, a Kentucky Republican, will be the first substantive talks between Biden and McCarthy in months.
House Republicans approved a bill on April 26 that would raise the debt limit but impose major cuts in federal spending. But those cuts are unlikely to win the support of all Republicans in the Democratic-controlled Senate, and Biden has said he will only negotiate on public spending once Congress eliminates the risk of default.
Arizona Sen. Kyrsten Sinema, an independent who left the Democratic Party in December, encouraged Biden and McCarthy to meet halfway.
«There’s not going to be a simple clean debt limit, the votes don’t exist for that,» he told CBS’s «Face the Nation.» «So the sooner these two guys get into the room and hear what the other needs, the more likely they are to solve this challenge and protect the full faith and credit of the United States of America.»
Yellen was asked on ABC if Biden could circumvent Congress by citing the 14th Amendment to the Constitution that the «validity» of the US debt «must not be questioned.» Yellen didn’t answer definitively, but said it shouldn’t be considered a valid solution.
“We should not get to the point where we have to consider whether the president can continue issuing debt. This would be a constitutional crisis,” he said.
“What to do if Congress does not fulfill its responsibility? There are just no good options,” she added.
Sen. James Lankford, R-Oklahoma, agreed with the risks of invoking the 14th Amendment. He told ABC that the Constitution is «very clear that spending, all those details about spending and money, in They actually have to go through Congress.”
He criticized Biden for being unwilling to negotiate spending cuts, arguing that the debt limit exists to force a broader conversation about government outlays. “It’s not just about the debt that is incurred,” the senator said. «But it’s also raising the limit of what we can continue to add to this.»
The question of the 14th Amendment was studied by lawyers for the Obama administration during the 2011 debt limit showdown, which reported Biden’s refusal to now negotiate with Republicans on raising the debt limit. At the time, Justice Department lawyers said they did not believe the president had the unilateral power to issue new debt.
Biden, in an interview with MSNBC on Friday, was asked about the 14th Amendment proposal and said, «I haven’t gotten there yet.»
Republican Rep. Mike Turner of Ohio, chairman of the House Intelligence Committee, and the top Democrat on the committee, Connecticut Rep. Jim Himes, told CNN’s «State of the Union» that the debate over the cap on debt posed a threat to national security.
“The Russians and the Chinese would look to exploit it,” Himes said. “America has never really come close to defaulting on its debt before. So it’s hard for us to imagine what that would look like.»
Turner argued that Biden would bear most of the responsibility. “I think if the president fails to negotiate with Congress and continues to spend out of control that threatens our economy, it’s a threat to national security,” he said.