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Janet Yellen Warns Against Government Shutdown

The Fed chair said a shutdown would “endanger” economic progress.
Fed Chair Janet Yellen addressed the prospect of a government shutdown at a Thursday press conference on the Fed's decision t
Fed Chair Janet Yellen addressed the prospect of a government shutdown at a Thursday press conference on the Fed's decision to leave interest rates unchanged.

Federal Reserve Chair Janet Yellen on Thursday called on Congress to fund the government, warning that a government shutdown would jeopardize the country’s economic health. Yellen also cautioned against brinksmanship over raising the debt ceiling. 

“I believe it is the responsibility of Congress to pass a budget, to fund the government, to deal with the debt ceiling so that America pays its bills,” Yellen said at a press conference on the Fed’s decision to leave its benchmark interest rate unchanged. “We have a good recovery in place that is really making progress. To see Congress take actions that would endanger that progress -- I think that would be quite unfortunate.” 

Yellen insisted that fear of a government shutdown and the harm it would cause the economy had not influenced the Fed’s decision to maintain near-zero interest rates. “It played absolutely no role in our decision,” Yellen said. 

House Republicans are refusing to pass legislation to fund the government, if it provides money to Planned Parenthood. President Barack Obama has vowed to veto any measure that doesn't include funding for the reproductive health care provider, setting up a confrontation that could shutter the federal government if a resolution is not reached before Sept. 30.

Standard & Poor’s estimated that the last GOP-led government shutdown in October 2013 cost the economy $24 billion in lost GDP. That shutdown, which lasted 16 days, was precipitated by House Republicans’ refusal to provide funding for the Affordable Care Act.

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