Janet Yellen Trashes GOP Debt Ceiling Plan as “Recipe for Economic and Financial Catastrophe”
The treasury secretary did not mince words on the Republican plan.
Treasury Secretary Janet Yellen on Thursday slammed the Republican plan for what the United States should do if it hits the debt limit.
The GOP has refused to lift the debt ceiling until major budget cuts are made. Instead, House Republicans introduced a proposal last week that would order the Treasury to prioritize payments on government debt and Social Security should the U.S. reach its debt maximum. Democrats have rejected the measure.
“Our systems are built to pay all of our bills on time and not to pick and choose which bills to pay,” Yellen told the Senate Finance Committee. “There is a reason that treasury secretaries of both parties have rejected this incredibly risky and dangerous idea.”
“I cannot give any assurances about the technical feasibility of such a plan,” she continued. “It would be an exceptionally risky, untested, and radical departure from normal payment practices of agencies across the federal government.”
Republicans have made clear they are willing to hold the debt ceiling hostage in order to cut costs in the federal budget. They proposed another plan last week that would slash funding for student debt relief, climate change policy, and IRS enforcement, among other things.
But Democrats, including President Joe Biden, have said they refuse to compromise on the debt ceiling, setting up a protracted battle. If the debate drags out too long, the United States could be in serious trouble. The government already hit the debt ceiling in January, and Yellen has previously warned the U.S. could default on its debt by the summer if the cap isn’t raised.
“It’s simply a recipe for economic and financial catastrophe to think we can pay some of our bills and not all of them,” Yellen said Thursday.