US faces ‘constitutional crisis’ over debt limit impasse, Yellen warns
US Treasury secretary Janet Yellen has warned of a “constitutional crisis” that risks economic and financial disaster if Congress does not increase the federal debt limit, with the government in danger of running out of cash in the absence of new borrowing capacity.
Her comments came as President Joe Biden prepared to meet congressional leaders in the White House for talks to break the fiscal impasse over lifting the debt ceiling, which Yellen has said could be breached as early as June 1.
“If Congress fails to meet its responsibility, there are simply no good options,” she said in an interview on ABC’s This Week on Sunday. Biden administration officials have considered whether they could invoke the 14th amendment of the US Constitution to continue issuing new debt to pay social security recipients, bondholders, government employees and others without legislative approval.
A clause in the amendment states that “the validity of the public debt of the United States, authorised by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned”. Economists and constitutional experts are divided over whether circumventing Congress in this way would be legal.
The US “should not get to the point where we need to consider whether the president can go on issuing debt. This would be a constitutional crisis,” Yellen said.
Asked whether Biden would invoke the 14th amendment, Yellen said she did not yet want to consider emergency options, but using the clause would be “among the not-good options”. Raising the debt ceiling was Congress’s job, she added.