Treasury Secretary Janet Yellen called the possible consequences of breaching the debt ceiling “catastrophic” during a House Financial Services Committee hearing today. “It’s imperative that Congress address the debt limit,” Yellen said. “If not, our current estimate is that the Treasury will likely exhaust its extraordinary measures by Oct. 18. At that point, Treasury would be left with limited resources that would be depleted quickly.” She added that she supported eliminating the debt ceiling entirely.
Federal Reserve Chairman Jerome Powell—also testifying at the hearing—shared the urgency. “If we were to default on our obligations, no one should assume that the Fed or anyone else can fully shield the American people from the consequences,” he said.
Several committee members also challenged Yellen on the Biden administration’s controversial proposal to expand mandatory IRS reporting on bank account information, which ABA strongly opposes. “This proposal has been something I’ve been asked about around my district,” said Rep. Trey Hollingsworth (R-Ind.). “It has people deeply afraid as an apparatus that can be used against them.” Rep. David Kustoff (R-Tenn.) called the proposal an invasion of privacy and a cybersecurity risk.
