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Treasury Secretary Janet Yellen said Tuesday that the U.S. would fall into another recession if Congress doesn’t address the debt limit.
In an interview on CNBC, Yellen said the failure of Congress to act would be “catastrophic.”
“It is utterly essential that this be done,” Yellen said. She called Oct. 18 “the deadline.”
Senate Majority Leader Chuck Schumer is trying again to have the Senate pass legislation to deal with the debt limit, but firm Republican opposition is forcing Democrats to consider using a special “reconciliation” vehicle so the measure could pass without any GOP support.
Read: Biden likens debt limit deadline to meteor headed towards Earth
The Treasury Secretary dismissed the idea that has been floated that the government mint a trillion dollar coin to pay off some of the debt.
She said it was a “gimmick” that was the equivalent of “asking the Federal Reserve to print money to cover deficits that Congress is unwilling to cover.”
The move would compromise the independence of the Fed and indicate that Congress and the executive branch can’t be counted on to pay the nation’s bills, she said.
On the economy, Yellen said that inflation pressures are “transitory but that doesn’t mean they will go away over the next several months.”
“I trust the Fed to make the right decisions,” she said.
Yellen said that President Joe Biden hasn’t yet made a decision on whether to give Federal Reserve Chairman Jerome Powell a second term when his current term expires in February next year.
“I know he will talk to many people and consider a wide range of evidence and opinions and make a very careful decision,” Yellen said.
Wall Street is starting to grow concerned as the Oct. 18 debt ceiling deadline grows nearer. Stocks
DJIA,
SPX,
were set to open higher on Tuesday after debt ceiling concerns dragged the indexes down Monday.
