Treasury Secretary Janet Yellen says she believes “we would have recession in the United States” if Congress does not raise the nation’s debt ceiling this summer, saying the situation “would be devastating.”
Yellen’s warning comes after the U.S. hit the debt ceiling on Jan. 19, with the Biden administration trying to pressure House Republicans to raise the debt ceiling as soon as possible. If the U.S. does default on its debt, the country would have “a financial crisis” on its hands, Yellen said, according to Axios.
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“Of course, it makes me nervous,” Yellen told the outlet. “It would be devastating. It’s a catastrophe.”
House Republicans have insisted on enacting sharp spending cuts rather than raising the debt ceiling. However, the party has yet to decide where to slash government spending.
Yellen has stated that any official negotiations regarding the debt ceiling will take place between the White House and Congress.
“The president and the leadership of Congress are responsible to find a way to get the debt ceiling raised,” Yellen said.
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David Kamin and Dan Pfeiffer, both former advisers to former President Barack Obama and former House Speaker John Boehner, have both stated that negotiations to raise the debt ceiling look bleaker than they did under similar circumstances in 2011.
Pfeiffer said that “it was very possible we were going over the cliff” in 2011, but such a crisis was averted because Boehner “did intellectually and substantively understand why default was terrible,” a situation he is “not sure” that House Speaker Kevin McCarthy understands.
