UNITED STATES NEWS

Biden, Yellen warn of ‘catastrophe’ if debt limit not raised

Feb 14, 2023, 7:00 PM | Updated: 11:04 pm

President Joe Biden speaks at the National Association of Counties 2023 Legislative Conference in W...

President Joe Biden speaks at the National Association of Counties 2023 Legislative Conference in Washington, Tuesday, Feb. 14, 2023. (AP Photo/Susan Walsh)

(AP Photo/Susan Walsh)

WASHINGTON (AP) — President Joe Biden and Treasury Secretary Janet Yellen warned Tuesday of a potential economic crisis if a deal isn’t reached to increase the federal debt ceiling.

They raised the alarm during speeches to the National Association of Counties, which was holding a conference in Washington.

Biden said many local governments have recovered from the pandemic, but “some in Congress are putting that progress at risk by threatening to have America default on its debt, which would be catastrophic for counties and the country. Even coming close to default would raise borrowing costs, making it harder to finance key projects in your communities.”

The concern over the debt ceiling is the result of a political showdown between House Republicans, who are demanding spending cuts, and the Democratic president, who insists on raising the limit without conditions.

Yellen similarly warned of a “catastrophe” in her own speech.

“In the longer term, a default would raise the cost of borrowing into perpetuity. Future investments, including public investments, would become substantially more costly,” she said.

“Household payments on mortgages, auto loans, and credit cards would rise, and American businesses would see credit markets deteriorate,” she said. “On top of that, it is unlikely that the federal government would be able to issue payments to millions of Americans, including our military families and seniors who rely on Social Security.”

Yellen notified Congress last month that the U.S. Treasury Department has resorted to “extraordinary measures” to avoid default on the nation’s $31.4 trillion borrowing authority. But the extraordinary measures would likely run out — and put the U.S. at risk of default — sometime around early June.

In a Jan. 13 letter to House and Senate leaders, Yellen said her actions will buy time until Congress can pass legislation that will either raise or suspend the limit, but she said it’s “critical that Congress act in a timely manner.”

Her latest comments come ahead of the Congressional Budget Office’s projections to be released Wednesday, which updates the office’s expectation about when Treasury will no longer be able to pay its obligations fully if the debt limit is not raised.

“Let’s not wait until the last minute,” Yellen said. “I believe it is a basic responsibility of our nation’s leaders to get this done.”

Biden and Republican House Speaker Kevin McCarthy met at the White House this month to discuss the issue. McCarthy told the president he would not raise the debt ceiling without concessions from Democrats.

“No agreement, no promises except we will continue this conversation,” McCarthy told reporters outside the White House after the meeting.

During his State of the Union address last week, Biden chided Republicans over the debt ceiling — suggesting that Republicans want to slash Medicare and Social Security.

Senate Republican leader Mitch McConnell on Tuesday continued trying to distance his party from those on the GOP’s right flank who have proposed ways to reel in spending on the popular programs.

“Let me say one more time: There is no agenda on the part of Senate Republicans to revisit Medicare or Social Security. Period,” McConnell said.

McConnell did indicate his support for McCarthy’s efforts to negotiate with Biden over spending cuts elsewhere in the federal budget as part of any deal with Congress to vote on raising the debt limit. But he also insisted the debt limit would be raised to avert what could be a fiscally dangerous default.

“America’s never going to default,” McConnell said.

Senate Majority Leader Chuck Schumer, D-N.Y., said it was time for McCarthy to “show us” his plan.

“He said he wants to make cuts, he has an obligation to show what those cuts are,” Schumer said.

Schumer said he was doubtful McCarthy would be able to corral his Republican majority in the House behind any plan because of the deep divisions between the hard-right and more traditional conservatives. He said some Republicans still back changes to the Social Security and Medicare programs.

“He’s going to have a rough time,” Schumer said of the House speaker. “The hard-right people want the deepest kind of cuts.”

__

Associated Press writer Lisa Mascaro contributed to this report.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

United States News

Associated Press

Remains believed to be missing woman, daughter found at West Virginia home on same day suspect died

BECKLEY, W.Va. (AP) — Remains believed to be that of a woman and her daughter who have not been seen in nearly 24 years were found at a southern West Virginia home on the same day that the girl’s alleged killer died while imprisoned, state police said. Susan Carter and her daughter, Natasha “Alex” Carter, […]

1 hour ago

Associated Press

Chicago woman convicted of killing, dismembering landlord, hiding some remains in freezer

CHICAGO (AP) — A Chicago woman has been convicted of killing and dismembering her landlord and putting some of the victim’s remains inside a freezer in the boarding house where she lived. A Cook County jury convicted Sandra Kolalou, 37, late Monday of all the charges she faced, including first-degree murder, dismembering a body, concealing […]

2 hours ago

Donald Trump speaks to the media upon arriving for his trial at Manhattan Criminal Court on April 2...

Associated Press

Tabloid publisher says he pledged to be Trump campaign’s ‘eyes and ears’ during 2016 race

Prosecutors urged a judge Tuesday to fine Donald Trump and hold him in contempt over social media posts they say violated a gag order.

3 hours ago

Associated Press

Richmond Mayor Stoney drops Virginia governor bid, he will run for lieutenant governor instead

RICHMOND, Va. (AP) — Democratic Richmond Mayor Levar Stoney announced Tuesday that he is dropping his bid for Virginia governor in 2025 and will instead run for lieutenant governor. “After careful consideration with my family, I believe that the best way to ensure that all Virginia families do get the change they deserve is for […]

5 hours ago

Associated Press

The Latest | Pecker says he wanted to keep tabloid’s agreement with Trump ‘as quiet as possible’

NEW YORK (AP) — Veteran tabloid publisher David Pecker returned to the witness stand in Donald Trump’s hush money case on Tuesday. Testimony in the case resumed just before midday following a morning hearing on the former president’s alleged gag order violations. Pecker, the National Enquirer’s former publisher and a longtime friend of Trump’s, was […]

7 hours ago

Associated Press

The Latest | Tent compound rises in southern Gaza as Israel prepares for Rafah offensive

Satellite photos analyzed by The Associated Press appear to show a new compound of tents being built near Khan Younis in the southern Gaza Strip as the Israeli military continues to signal it plans an offensive on the city of Rafah. Khan Younis has been targeted by repeated Israeli military operations over recent weeks. Israel […]

10 hours ago

Sponsored Articles

...

COLLINS COMFORT MASTERS

Here are 5 things Arizona residents need to know about their HVAC system

It's warming back up in the Valley, which means it's time to think about your air conditioning system's preparedness for summer.

...

Fiesta Bowl Foundation

The 51st annual Vrbo Fiesta Bowl Parade is excitingly upon us

The 51st annual Vrbo Fiesta Bowl Parade presented by Lerner & Rowe is upon us! The attraction honors Arizona and the history of the game.

...

Collins Comfort Masters

Avoid a potential emergency and get your home’s heating and furnace safety checked

With the weather getting colder throughout the Valley, the best time to make sure your heating is all up to date is now. 

Biden, Yellen warn of ‘catastrophe’ if debt limit not raised