'You’ll allow a default?' Janet Yellen grilled over stalled debt ceiling negotiations

21 May 2023

United States Treasury Secretary Janet Yellen on Sunday reiterated her dire warnings about what will happen if the ongoing negotiations between President Joe Biden and House of Representatives Speaker Kevin McCarthy (R-California) fail to secure an increase of the nation's borrowing limit and trigger an unprecedented debt default.

Biden told reporters in Hiroshima, Japan this weekend that he is "looking at the 14th Amendment as to whether or not we have the authority — I think we have the authority. The question is, could it be done and invoked in time that it would not be appealed, and as a consequence past the date in question and still default on the debt. That is a question that I think is unresolved."

On Sunday's edition of Meet the Press, NBC News moderator Chuck Todd grilled Yellen on which obligations would go unfulfilled if the US plunges into its self-excavated financial abyss.

"Are you just gonna sit there and, and pick and choose? Or why not go and pay and then you know it, it's one of those, are you gonna pay all of our debts and essentially let the courts tell us you shouldn't have? I mean, if we breach this debt ceiling — I understand not wanting to use it now — but are you, are we really gonna sit there and just let some bills go unpaid, not even trying this?" Todd said, referring to Biden potentially invoking the 14th Amendment to bypass the stalled Congress.

"Well, we take the debt ceiling seriously as a constraint on our ability to pay bills that are coming due. And my assumption is that if the debt ceiling isn't raised, there will be hard choices to make about what bills go unpaid. And, you know, defaulting on any of our payments..." Yellen began.

"So there will be bills unpaid. What you're saying is, if the debt ceiling is not raised, that there's gonna be a default on President Biden's watch, even though he doesn't want it, that he's not, you're not gonna try any other measures. You'll allow a default on some debt if Congress doesn't raise this debt ceiling," Todd responded.

"Well, there will be some bill," Yellen continued. "We, we have to pay interest in principle on outstanding debt. We also have obligations to seniors who count on Social Security, our military that expects pay, contractors who've provided services to the federal government, and some bills have to go unpaid."

Todd noted that "there will be some bills unpaid if the debt ceiling is not raised," which Yellen confirmed.

"Yes. And many people including the credit rating agencies..." she started to reply.

"Have you decided which bills those are gonna be yet?" Todd asked.

"The I look, I, I would say we are focused on raising the debt ceiling and there will be hard choices if that doesn't occur," Yellen replied. "There can be no acceptable outcomes if the dead ceiling isn't raised regardless of what decisions we make."

Watch the exchange below or at this link.

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