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WASHINGTON — Treasury Secretary Janet Yellen said Thursday that China would be among the first in line to get paid under a Republican proposal to prioritize some U.S. debt obligations over others, calling it a “dangerous idea” that would technically cause the U.S. to default on its bonds.
House Republicans are holding up a bill to raise the U.S. debt ceiling, which hit its $31.4 trillion borrowing limit in January. They want any agreement on the debt limit to be paired with spending cuts on social programs.
Their latest debt ceiling proposal, which passed 21-17 out of the House Ways and Means Committee last week, would prioritize which payments the U.S. Treasury makes first when the U.S. hits the ceiling at which it cannot issue more bonds.
“The government on average makes millions of payments each day, and our systems are built to pay all of our bills on time and not to pick and choose which bills to pay,” Yellen said during a Senate Finance Committee hearing on the federal budget. “There is a reason that Treasury secretaries of both parties have rejected this incredibly risky and dangerous idea and it’s never been tried before.”
House Republicans are holding up a bill to raise the U.S. debt ceiling, which hit its $31.4 trillion borrowing limit in January. They want any agreement on the debt limit to be paired with spending cuts on social programs.
Their latest debt ceiling proposal, which passed 21-17 out of the House Ways and Means Committee last week, would prioritize which payments the U.S. Treasury makes first when the U.S. hits the ceiling at which it cannot issue more bonds.
“The government on average makes millions of payments each day, and our systems are built to pay all of our bills on time and not to pick and choose which bills to pay,” Yellen said during a Senate Finance Committee hearing on the federal budget. “There is a reason that Treasury secretaries of both parties have rejected this incredibly risky and dangerous idea and it’s never been tried before.”
