Debt ceiling debate heats up in D.C.
Jessica Smith joins Brian Sozzi and Emily McCormick to break down Yellen's latest op-ed that stressed to Congress the importance of raising the debt ceiling as any hesitation could affect the country significantly.
Video Transcript
BRIAN SOZZI: And Jess, switching gears a bit here. I think the op-ed in The Wall Street Journal over the weekend from Treasury Secretary Janet Yellen, on the debt ceiling and the need to raise it. Raised a lot of eyebrows on the street this morning.
JESSICA SMITH: Yeah that's going to be a really big focus in Washington this week as we're coming up on several really big important deadlines. Today, the House Committee is expected to consider a short term funding bill to keep the government open. It's possible that Democratic leaders could put the debt limit suspension into that piece of legislation. It's not clear yet if they're going to do that, but it is possible. Democratic leadership has said that they're going to act on both government funding and the debt limit this week.
The problem here is that Republicans say they are not going to vote to lift or suspend the debt limit. They say that Democrats are in charge and Democrats should do this on their own. Now the issue here is that the debt limit is not enacting new spending. Even if Democrats weren't trying to pass trillions in new spending this year they would still have to raise the debt limit. So Democrats are arguing, and Secretary Yellen is arguing that the national debt right now is largely bipartisan. In the past, it has been a bipartisan effort to raise or suspend it. Lawmakers did it 3 times on a bipartisan basis under the Trump administration.
Secretary Yellen has been talking to lawmakers for quite some time now. We've seen letter after letter, she's called them. And now this weekend she wrote in The Wall Street Journal this op Ed urging them to act. Saying that not only is it important to act here, the timing matters too. She says that it matters if the US avoids default by minutes or months as we saw in 2011. Even the concern of default can hurt. She went on to say in her op-ed, time is money here, potentially billions of dollars. Neither delay nor default is tolerable. The past 17 months have tested our nation's economic strength. We are just now emerging from crisis. We must not plunge ourselves back into an entirely avoidable one.
Again, the House Rules Committee is going to meet around noon today to consider the short term funding bill. We'll be watching to see if we get any update on how Democrats plan to approach this with the debt limit as well. They say they're going to act on it this week. Republicans say they should put it in their reconciliation package. But timing here is tricky because if they agree to put it in the reconciliation package, that's going to take some time before that is complete. And the US could run out of money to pay its bills sometime in October. Timing is unclear there. But Treasury Secretary Yellen said it could happen as soon as next month. Guys.
EMILY MCCORMICK: Definitely a lot of moving pieces on that front. And of course, Treasury Secretary, Janet Yellen also saying that to default on payments could generate quote widespread economic catastrophe. But Yahoo Finance's Jessica Smith, thank you so much for breaking that down for us.
