This archive report was first published on 5 October 2021.
US Treasury Secretary Janet Yellen has sounded the alarm on the potential consequences of a US debt default, warning that it could trigger another recession. The warning comes as the October 5, 2021, deadline for raising the debt ceiling draws near.
Speaking to CNBC, Yellen emphasized the gravity of the situation, stating, 'I totally expect it would cause a recession.' This unprecedented scenario would be the result of lawmakers' inability to agree on raising the debt ceiling, a move that has been done dozens of times in the past with bipartisan support.
However, this year's negotiations have been marked by extraordinary acrimony, with Senate Republicans refusing to vote for lifting the ceiling and vowing to block Democrats from passing a simple vote along party lines. Instead, they are attempting to force Democrats to use a complex maneuver called reconciliation to take sole responsibility for the debt hike.
President Joe Biden has condemned the Republican stance, labeling them 'reckless and dangerous' for refusing to join Democrats in raising the debt limit.
