Minister of Finance Janet Yellen on Tuesday reportedly warned that if Congress does not raise the government’s debt ceiling – and cause a default – it would result in “economic disaster”. drive up interest rates for years to come.

What happened: In a speech prepared for an event in Washington, Yellen said a default on US debt would lead to job losses and boost household payments on mortgages, car loans and credit cards, Reuters reported.

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The Treasury Secretary said it was a “fundamental responsibility” of Congress to raise or suspend the $31.4 trillion debt ceiling and warned that a default would jeopardize U.S. economic progress since the pandemic.

“A default on our debt would result in economic and financial catastrophe,” Yellen said Sacramento Metropolitan Chamber of Commerce members, according to the report. “A default would increase the cost of borrowing forever. Future investments would be significantly more expensive,” she said.

Poll: Meanwhile top Republican in the House of Representatives said Tuesday they would proceed with a vote this week on a party law to cut spending and raise the government’s $31.4 trillion debt ceiling, despite signs of growing opposition from within its own ranks, Reuters reported.

Last week, House Speaker Kevin McCarthy had unveiled a plan to raise the debt ceiling by $1.5 trillion and cut federal spending by three times. McCarthy’s proposal would reduce total domestic and military spending to 2022 levels and limit growth to 1% per year in the coming years.

Yellen pointed out that unless the debt ceiling is raised, US companies will see credit markets deteriorate and the government may not be able to make payments to military families and seniors who rely on Social Security.

“Congress must vote to raise or suspend the debt limit. This should be unconditional. And it…