Yellen Calls On Congress To Raise Debt Ceiling: 'We'll Be Unable to Pay Our Bills For The First Time In American History'

U.S. Treasury Secretary Janet Yellen called on Congress Thursday to raise the debt ceiling in order to prevent the American federal government from defaulting on its debts and ensuing financial chaos. 

“We’ll be unable to pay our bills for the first time in American history,” she said, adding the decision to vote against raising the debt ceiling could provoke a recession. 

What Happened: Yellen was talking before the U.S. House Committee on Financial Services, along with Federal Reserve Chair Jerome Powell. Several economic topics were discussed — including concerns about the debt, inflation and the recovery of the American economy. 

The most important topic: the upcoming vote to raise the debt ceiling. 

Why It Matters: House Democrats are supporting increasing the debt ceiling so government debts can be paid off, the government can continue functioning and spending on programs like Social Security continues. 

Some of that debt, noted Congressman Ritchie Torres (D-NY), was created by former President Donald Trump’s tax cuts. 

“Raising the debt limit would not authorize more spending, it would simply pay the debt of previous administrations, including the Trump administration,” he said Thursday. 

Republican leadership, led by Senator Mitch McConnell (R-KY), have spoken against raising the debt ceiling. McConnell spoke out against raising the debt ceiling as long as that vote would be coupled with passing the $3.5-trillion infrastructure bill through reconciliation. 

“Democrats won’t get bipartisan help paving a path to partisan recklessness,” he tweeted Tuesday. 

What Else: Both Yellen and Powell touted America’s economic recovery over the last year, and the treasury secretary applauded the passage of federal several stimulus packages. 

“We’re outperforming, the U.S. is outperforming, most other developed countries in the strength of our recovery,” she said. 

Powell said the economy’s strength is slowing mostly because of rising COVID-19 cases.

“Jobs gains averaged 750,000 per month over the last three months,” Powell said, reiterating his lack of concern over runaway inflation in the short term. 

Photo: Darren Halstead via Unsplash.