Yellen Says Debt Limit Threatens Economic Gains Made Under Biden By Bloomberg

(Bloomberg) — Treasury Secretary Janet Yellen implored lawmakers to lift the federal debt limit as she credited the Biden administration’s high-priced economic policies for driving a “historic recovery” from the coronavirus pandemic. 

Yellen called the showdown between House Republicans and the Biden White House over the debt ceiling “an issue that could threaten all the progress that we’ve made over the past two years,” according to a text of remarks she’s scheduled to deliver Tuesday at a conference in Washington.

Outstanding US debt reached its statutory limit of $31.4 trillion in January. The Treasury Department has since used special accounting maneuvers to make funds available and prevent a default, an event Yellen again predicted would trigger an “economic and financial catastrophe.”

Yellen is expected to provide Congress new guidance, possibly by the end of this week, on how much time lawmakers have to lift the ceiling before default becomes a real danger. 

Speaking at an event organized by the Sacramento Metropolitan Chamber of Commerce, Yellen reviewed the administration’s top legislative victories, which have appropriated more than $1 trillion for infrastructure, semiconductor research and manufacturing, and incentives for clean energy technology.

Yellen credited those laws with generating growth and jobs that have lowered the overall unemployment rate to 3.5%, and to a record low of 5% for Black Americans. Yet that spending also helped fuel inflation and drive Republicans in Congress to take a harder line in the debt-limit debate. 

House Speaker Kevin McCarthy has demanded pledges of future spending cuts in exchange for lifting the ceiling. President Joe Biden has insisted the debt limit be raised without conditions.

House Republican leaders plan a vote on their debt-ceiling proposal later this week.

©2023 Bloomberg L.P.

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