Treasury Secretary Janet Yellen, staring down a U.S. default if Congress does not reach a deal to raise the debt ceiling, argued Thursday the country should find a new way to avoid similar showdowns in the future.
“Personally, I think we should find a different system for deciding on fiscal policy,” Yellen said at a Group of Seven meeting in Japan, according to The Associated Press, when asked about the debt ceiling.
Yellen, who stressed it was her opinion and not President Biden’s, floated the idea Congress could repeal the debt ceiling entirely. Or the president could raise the debt ceiling, she added, with lawmakers having the ability to veto the decision.
Yellen put forward the idea of an alternative system after she informed lawmakers the U.S. will be unable to meet its obligations by as early as June 1. The latest deadline, which came sooner than anticipated, has put pressure on Congress and the White House to reach an agreement on raising the debt ceiling.
But the two sides have been in a standoff for months, with Republicans insisting the White House agree to spending cuts before raising the debt limit. Biden and Democrats have lobbied for a “clean” rise to the debt ceiling.
It is the stalemate that Yellen on Thursday said she hopes to avoid in the future. The U.S. has run up against its borrowing limit nearly 80 times since 1960, Yellen noted.
“I don’t think that’s any way to run the government,” Yellen said. “To go through this every couple of years is tremendously damaging.”
Yellen has warned a U.S. debt default would be disastrous for the national and international economic systems. The ramifications of such an action are unclear because the U.S. has never defaulted on its debt because of the borrowing limit.
“A default is frankly unthinkable,” Yellen said. “America should never default. It would rank as a catastrophe.”