Yellen says reconciliation a ‘viable’ way to tackle debt limit

Treasury Secretary Janet Yellen said using a budget procedure known as reconciliation is a “viable” solution to raising the debt ceiling for Democrats if Republicans won’t take action to prevent the nation from defaulting on its national debt.

In a recent interview with The Washington Post, Yellen reiterated that tackling the debt ceiling should “absolutely” be done on a bipartisan basis, as it has in the past. But if a current standoff between Republicans and Democrats over the debt ceiling doesn’t let up, Yellen said Democrats may have to handle the problem themselves. 

“If Democrats have to do it by themselves, that’s better than defaulting on the debt to teach the Republicans a lesson,” she said.

“To me, as the person who has to pay the bills and watches this on a daily basis — our funds dwindling in our account over time — I very much want to make sure that this is addressed. And this Section 304 procedure is one way in which that could occur,” Yellen said, referring to a section of the budget procedure she said could be used to tackle the debt ceiling.  

“I don’t want to take 304 off the table, because it looks to me like a viable route to do it,” she added. 

Her remarks come as many Democrats have been opposed to using the reconciliation process, which would allow them to pass certain budget legislation with a simple majority vote with their narrow majority in the Senate, to act on the debt ceiling. 

For months, Democratic leaders have insisted Republicans work with them to raise or suspend the debt limit, pointing to the multiple instances both parties did so under past administrations.

However, Republican leadership has called on their rank-and-file members to vote against raising the debt ceiling amid a high-stakes standoff with Democrats, as frustrations mount over a massive social spending package the party aims to pass using reconciliation, which will allow them to bypass the Senate GOP filibuster.

Last month, Congress passed legislation, in a bipartisan vote in the upper chamber, to temporarily raise the debt ceiling into December, after Yellen warned lawmakers had until Oct. 18 before the U.S. was expected to default on its debt.

But Senate Majority Leader Mitch McConnell (R-Ky.) warned shortly after that Republicans would not work with Democrats to act on the debt ceiling again, putting pressure on Democrats to address the legislation on their own to avert a default in the weeks ahead.