Treasury Secretary Yellen advised Congress to raise the debt ceiling to save the pandemic recovery.
She said a "majority" of Americans would suffer without funding for programs like social security.
Yellen also encouraged Congress to invest in Biden's social safety net plan, Build Back Better.
U.S. Treasury Secretary Janet Yellen thinks that the U.S. economy has recovered well from the hit it took during the COVID-19 pandemic - but she says that failing to raise the national debt limit soon could compromise all that progress.
In remarks that Yellen prepared for the Senate Banking Committee hearing on Tuesday, she urged Congress to raise the debt ceiling so that America could pay its bills, warning that "a deep recession" would come otherwise.
"I cannot overstate how critical it is that Congress address this issue," she said. "America must pay its bills on time and in full. If we do not, we will eviscerate our current recovery."
Yellen noted that the "majority" of Americans would suffer if they did not receive expected income, such as military paychecks and Social Security.
The federal government is in danger of running out of money to pay for bills as soon as December 15. If lawmakers don't reach an agreement by then, the borrowing limit is automatically reinstated to its current level. Congress previously voted in 2019 to suspend the debt ceiling until July 31 of this year. The U.S. has since added $6.5 trillion to its debt total, owing $28.5 trillion in all.
Yellen has continually urged Congress to deal with its tab this year.
In July, she warned Congress that the country would undergo an "absolutely catastrophic" default that would endanger the US' economic recovery from the pandemic if it did not extend the deadline then. A failure to do so would jumpstart a chain reaction of cash shortages that would affect individuals, businesses, and foreign governments. After Mitch McConnell spent several weeks this fall refusing to help Democrats raise the debt ceiling and saying they needed to do it on their own, Republicans at the last minute voted to extend the limit.
In her remarks on Tuesday, Yellen also encouraged the Senate to approve the Build Back Better legislation, which just passed in the House of Representatives. Covering a wide range of programs that includes health care, child care, and climate change, it is poised to be the biggest expansion of its kind in decades.
"These investments, we expect, will lead to a GDP increase over the long-term without increasing the national debt or deficit by a dollar," she said.