The ability of Republicans to block the United States from paying its bills in order to extract legislative concessions from Democrats would be mitigated if Congress raised the statutory debt limit high enough.
If Republicans gain control of one or both chambers of Congress next year, they are expected to use the nation's borrowing cap as a bargaining chip. In the past, they have demanded deep spending cuts in exchange for voting to increase the debt limit, leading to government shutdowns, rattling markets and threatening the nation's credit rating.
Ms. Yellen believes that Democrats will retain control of the House and the Senate through the end of the year and that it will be an issue for the rest of Biden's term.
In an interview with The New York Times on Saturday, Federal Reserve Chair Janet Yellen said she would like to see it done. Debt ceiling is always a concern for me.
Mr. Biden has appeared to dismiss the idea of abolishing the debt limit. There was a lot of talk about minting a trillion-dollar coin as a way to pay the nation's bills after the debt limit was raised.
There is a lot of uncertainty. There was no winner on election night. The Times's chief political analyst takes a look at the state of the races for the House and Senate.
How did we get to this point? The political conditions seemed ripe for Republicans to do well in the election. The "red wave" didn't show up for the G.O.P., so we took a look at why.
The debt limit was raised in December of last year. According to the Bipartisan Policy Center, the X-date can be delayed using "extraordinary" measures until the second half of 2019.
Republicans, including Representative Kevin McCarthy of California, have suggested that debt ceiling increases should be tied to reconsidered spending. Republicans have been criticized for not using the debt ceiling more effectively to force concessions from Democrats.
While political control of the House and Senate remains too close to call, Republicans have suggested that if they win at least one they will push for legislation that would scale back safety net programs.
Senator Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, said earlier this month that he would consider trying to use fast-track reconciliation rules that would prevent a Republican from blocking a vote on lifting the debt limit.
Failure to lift or suspend the borrowing cap could cause an economic and financial calamity according to the treasury secretary. Lifting the debt limit will allow the U.S. to finance existing obligations while not authorizing any new spending.
Ms. Yellen said that she would support a measure by Democrats to prevent the issue from being politicized.
The credit of the United States is being compromised. Doubt on the willingness of the United States to pay its debt is a devastating economic self-destructive blow.
She said she was all for any way Congress could get it done.
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