Breaking from months of Democratic strategy in recent months which sought to pass a debt ceiling hike only in conjunction with Republicans, Janet Yellen told the Washington Post in an interview published on Monday that Democrats should address the nation’s debt limit on their own if Republicans refuse to cooperate, which they have made clear they will.
Yellen has repeatedly urged Congress to act in a bipartisan manner to extend the U.S. government’s borrowing authority or else risk dangerous economic consequences.
“Should it be done on a bipartisan basis? Absolutely. Now, if they’re not going to cooperate, I don’t want to play chicken and end up not raising the debt ceiling. I think that’s the worst possible outcome,” Yellen told The Washington Post on Sunday as she traveled to Dublin.
“If Democrats have to do it by themselves, that’s better than defaulting on the debt to teach the Republicans a lesson,” she added.
It wasn't clear what lesson the Democrats - who have a majority in the House and Senate - would teach the Republicans by pushing the country into default and being rightfully blamed for the resulting depression.
For now, the market is not too fearful of the debt-ceiling debacle (which likely means Democrats will crank up the fearmongery to '11' in the next few weeks)...
But hey, the Treasury Secretary was busy with other things in Dublin...
Elsewhere in a separate interview with Reuters, Yellen said the United States could look at eventually lowering some tariffs on China in a reciprocal way. She also discusses Biden’s expected Federal Reserve chair appointment and technology companies’ potential support of global tax rules.
Speaking to reporters in Dublin at joint press conference with Irish Finance Minister Paschal Donohoe, Yellen disagreed that the global tax deal will hurt developing countries and said that the OECD tax deal as “once in a generation” agreement, adding that all countries will need to move together on pillar 1 of OECD tax agreement.
Yellen also brushed off Treasury-market jitters and expressed confidence in the continuing recovery from the Covid-19 pandemic. This comes from the same financial genius who 5 years ago said "no financial crisis again in her lifetime"
Yellen is in Ireland for a tax policy meeting before traveling to Scotland for the U.N. climate change conference. It wasn't clear if she was flying on a gas guzzling private jet.