The Republican-led House of Representatives voted in April to lift the borrowing limit, but only if President Biden commits to huge cuts to spending which the party views as excessive. President Biden has so far refused to negotiate.
“I know he wants to set up a process in which spending priorities and levels are discussed,” Ms Yellen said on This Week, “but these negotiations should not take place with a gun pointed at the head of the American people.”
The debt ceiling has been raised more than 100 times since it was created in 1917 and now stands at $31.4 trillion (£24.8 trillion). The US government hit this limit in January, blocking the government from borrowing any more money.
The stalemate raises the risk of the country’s first-ever default on its debt, with wide-reaching implications for the global economy.
A default could trigger a huge spike in borrowing costs in the US that would then spread around the world.
President Biden’s economic advisers have warned that eight million jobs could be lost and 6pc wiped off the nation’s GDP.
Ms Yellen’s comments come ahead of President Biden’s meeting with congressional leaders on Tuesday to discuss the debt ceiling.
The Treasury has taken “extraordinary measures” in order to finance the government since it hit its borrowing limit in January – including suspending investment in some federal employees’ pension accounts – but Ms Yellen has warned these will soon be exhausted.
