(Bloomberg) -- Treasury Secretary Janet Yellen said US lawmakers hold Ukraine’s fate in their hands as they block $61 billion in fresh funding requested by the Biden administration for the embattled East European country.
“This is a dire situation and we can hold ourselves responsible for Ukraine’s defeat if we don’t manage to get this funding to Ukraine,” Yellen told reporters as she traveled to Mexico City Tuesday.
The Treasury chief said Kyiv, as it holds off Russian forces, is channeling all its tax revenue into its military defense. But keeping its schools and hospitals open and other services operating depends crucially on US funding, she said. The White House has said current US funding will run out by the end of the year.
Republicans have insisted they will only agree to the new aid package if Democrats and the White House make major concessions on immigration policy to curb a surge in migrant crossings at the US border with Mexico.
Ukrainian President Volodymyr Zelenskiy on Tuesday canceled plans to address the US Senate via videoconference as negotiations stalled.
The US has already delivered tens of billions in military and non-military assistance to Ukraine since the Russian invasion in February 2022.
“It’s essential to our allies who are providing, quite frankly, overall more generous funding than we are,” Yellen said. “We’re doing a lot, they’re doing even more than we’re doing and Ukraine is just running out of money.”
‘Eating Their Words’
The Treasury chief was on her way to Mexico to discuss trade ties and increased cooperation with authorities there aimed at fighting the illicit supply of fentanyl into the US.
In comments on the US economic outlook, Yellen took at swipe at economists who predicted only a recession would tame inflation and criticized her for continually saying she saw a path to a so-called soft landing.
“Economists who’ve said it’s going to require very high unemployment to get this done are eating their words,” she said. “It doesn’t seem at all like it’s requiring higher unemployment.”
Former Treasury Secretary Lawrence Summers was the most prominent among many economists who dismissed the possibility the US could escape high inflation without a serious uptick in joblessness. In July 2022 he said unemployment would have to rise beyond 5% for inflation to reach the Federal Reserve’s 2% target.
The Fed’s preferred gauge of price pressures, the PCE price index, fell to 3% in the 12 months through October. Unemployment, meanwhile, has ticked up in recent months, driven in part by would-be workers coming off the sidelines to seek jobs, but remained below 4%.
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