U.S. Treasury Secretary Janet Yellen testifies during a Senate Finance Committee hearing on President Joe Biden’s proposed fiscal 2024 budget request March 16, 2023 in Capitol Hill, Washington, USA.
Mary F. Calvert | Reuters
WASHINGTON — Treasury Secretary Janet Yellen said on Thursday that China would be the first to get paid, based on a Republican proposal to prioritize some of the U.S. debt debt over others, technically giving the U.S. debt. It said it was a “dangerous idea” that would lead to non-compliance. bonds.
House Republicans have put on hold a bill to raise the US debt ceiling, which reached its $31.4 trillion borrowing limit in January. They want any deal on a debt ceiling to be combined with spending cuts on social programs.
Their latest debt ceiling proposal Passed 21-17 Last week, the chairman of the House Ways and Means Committee said he would prioritize the first payments made by the U.S. Treasury when the U.S. hits a cap that prevents it from issuing more bonds. It prioritizes public debt obligations and social security payments over its obligations.
“On average, the government makes millions of payments every day, and our system ensures that every bill is paid on time,” Yellen said during a Senate Finance Committee hearing on the federal budget. It is built and you don’t choose which bills to pay.” has never been attempted.”
Democrats say the Republican plan to prioritize payments benefits Wall Street and China, which hold most of the debt. China holds about $1 trillion of US Treasuries, which is about 3% of all US debt outstanding.
“If the Treasury follows this Republican plan, who will be paid first, given that China has about $1 trillion in U.S. debt?” Senator Sherrod Brown (Democrat, Ohio) state) asked.
Referring to the elderly on Social Security and veterans receiving veterans benefits, Yellen replied, “If it’s a priority, China will get paid before them.” She added that debt prioritization is “default by another name.”
Economists have called the proposal for the government to pay some debts more than others “grossly misguided.”
“I can make no guarantees about the technical feasibility of such a plan,” Yellen told lawmakers. “It would be a very dangerous, untested, and radical deviation from the normal payment practices of agencies across the federal government.”
She said lawmakers need to realize that “raising the debt ceiling is our responsibility to protect full confidence and credit in the United States.”
The Treasury Department has initiated temporary measures in recent months, including suspending new investments in certain federal retirement programs and health benefit funds to avoid defaults. The measures are set to expire in June.
“We have to pay our bills. We have to pay all our bills. The willingness and commitment to take responsibility for paying bills that have already been incurred is what underlies America’s high credit rating.” said Yellen.
“If we fail to pay any of our bills, we question whether we are worthy of our current credit rating. It’s a recipe for financial and financial catastrophe.Them,” she added.