Janet Yellen, treasury secretary, stated that Congress failing to raise the debt limit would likely cause a recession and even a financial crisis.
Janet Yellen, then-Federal Reserve Chair, speaks at her last news conference in Washington DC on December... [+] 13 2017. Getty Images
The Key Facts
During a Sunday appearance on ABCs This week, Yellen said that raising the debt ceiling was absolutely necessary to fund critical programs such as Social Security and Medicare. Yellen stated that the nation's credit rating is also at risk. She said that raising the debt limit was absolutely necessary to continue funding critical programs like Social Security and Medicare, as well as child tax credits and military paychecks. Other solutions to the debt limit issue were rejected by Yellen, including invoking Amendment 14 to create a trillion-dollar coin. She said that it was the responsibility of Congress to reach a bipartisan solution to what she called a self-manufactured problem.
It is a huge amount of money at stake. Failure to raise the debt limit would likely cause a recession and even a financial crisis. It would be a disaster, Yellen stated.
Thursday's vote by the Senate approved a temporary increase to the debt ceiling. This was just days before the country would face a default. Democrats and Republicans are still not able to agree on a long-term solution for the federal government that will allow it to continue paying its debts beyond December 3, when the temporary stopgap bill expires. Over the debt ceiling, the two parties have been fighting for weeks. Democrats are determined to find a bipartisan solution to the debt limit issue. Republicans, however, insist that Democrats reduce their $3.5 trillion spending plan.
Senate passes Stopgap bill to raise debt ceiling, but long-term solution is still unclear (Forbes).
Tens of Millions of Americans could lose benefits overnight if the U.S. defaults this month, White House warns (Forbes).
Republicans Block Democratic Effort to Raise the Debt Ceiling, As Officials Fear Economic Catastrophe (Forbes).