30 September (WNN) — Treasury Secretary Janet Yellen on Thursday called for a complete elimination of the federal debt limit and rejected lawmakers’ idea of a $1 trillion coin to avoid defaulting on loans.
He described the debt limit as “very disastrous” during testimony before the House Committee on Financial Services. The hearing is taking place amid a debate in Congress whether to increase the debt limit before the US government runs out of money.
Yellen said, “When Congress legislates spending and creates a tax policy that sets taxes, these are important decisions that Congress is making.”
“And if, in order to finance those spending and tax decisions, it is necessary to issue additional debt, then I believe it is very disastrous for the President and for me, the Secretary of the Treasury, in a situation where we May be unable to pay bills as a result of past decisions.”
When asked by Representative Shawn Castane, D-Ill., if she supports repeal of the national debt limit, Yellen replied: “Yes, I will.”
Yellen warned Congress on Tuesday that the US government would run out of money to pay its bills by October 18 if the debt limit is not raised.
“I think it would be disastrous for the economy and individual families,” if Congress fails to raise the debt limit and the United States defaults, Yellen said.
When asked about a proposal by some lawmakers to take the extreme step of creating a $1 trillion platinum coin to be deposited with the Federal Reserve to avoid defaults, Yellen shrugged off the idea.
“I believe the only way for Congress to handle the debt cap is to raise it and show the world, the financial markets, and the public that we are a country that will pay our bills,” she said. .
In recent negotiations a measure to raise the debt limit to fund the US government through December was initially linked to a continuing resolution. Lawmakers split the issue on Wednesday as it was clear Republicans would not vote in favor of raising the debt limit while threatening a government shutdown.
The Senate voted in favor of the stopgap funding measure on Thursday, and the House was expected to follow suit.