A rush transcript of "This Week with George Stephanopoulos" airing on Sunday, October 10, 2021 on ABC News is below. This copy may not be in its final form, may be updated and may contain minor transcription errors. For previous show transcripts, visit the "This Week" transcript archive.

       STEPHANOPOULOS: Good morning, and welcome to "This Week," a week of cliffhangers in Washington, the economy at stake.

       Default has been avoided for now. Just enough Republicans joined Democrats to extend the debt ceiling until December, when deadlines on the debt, government funding and the president's investment agenda will converge, what could be a make-or-break for the Biden's presidency and America's economy.

       All this poses tough challenges for our headliner, Treasury Secretary Janet Yellen.

       Good morning, Madam Secretary.

       JANET YELLEN, U.S. TREASURY SECRETARY: Good morning. Thanks for the invitation.

       STEPHANOPOULOS: So, we all dodged a bullet this week.

       But Senator McConnell has warned President Biden that Republicans won't help next time on the debt limit. I want to read part of this letter to President Biden -- quote -- "I will not be a party to any future effort to mitigate the consequences of Democratic mismanagement. Your lieutenants on Capitol Hill now have the time they claimed they lacked to address the debt ceiling through stand-alone reconciliation and all the tools to do it."

       What are the consequences if he keeps his word?

       YELLEN: Well, it is absolutely imperative that we raise the debt ceiling.

       Debt's necessary, not to fund any new spending programs, but to pay the bills that result from Congress' past decisions. A group of business and community leaders met with President Biden and me last week to talk about the disastrous impact it would have for the first time America not paying its bills.

       Fifty million Americans wouldn't receive Social Security payments, would be put at risk. Our troops won't know when or if they would be paid. The 30 million families that receive a child tax credit, those payments would be in jeopardy.

       And the nation's credit rating would be in jeopardy as well. U.S. treasuries are the world's safest possible asset. That would be at risk as well. And that really underpins the reserve status, currency status of the dollar.

       So, there is an enormous amount at stake. A failure to raise the debt ceiling would probably cause a recession and could even result in a financial crisis.

       STEPHANOPOULOS: But you...

       YELLEN: It would be a catastrophe.

       STEPHANOPOULOS: But, you know, Madam Secretary, we have seen this cycle so many times. At some point votes, the votes just aren't going to be there. Congress is going to make a mistake, a miscalculation.

       I know you support eliminating the debt limit. Have you convinced the president to back you on that?

       YELLEN: Well, look, it is really up to Congress.

       I -- yes, I have said I support, personally, getting rid of the debt ceiling. I believe that, once Congress and the administration have decided on spending plans and tax plans, it's simply their responsibility to pay the bills that result from that.

       And that means we have had deficits for most of the post-war period. And that means raising the debt ceiling. It is a housekeeping chore. There is really -- we should be debating the government's fiscal policy when we decide on those expenditures and taxes...

       STEPHANOPOULOS: You call it...

       YELLEN: ... not when the credit card bill from -- comes due.

       STEPHANOPOULOS: You call it a housekeeping chore. Others say it's a charade at this point.

       Why not consider alternatives? You know, several members of Congress have recommended this trillion dollar coin.

       YELLEN: Well, I wouldn’t be supportive of a trillion dollar coin. I think it’s a gimmick. And it jeopardizes the independence of the Federal Reserve. You would be asking to essentially print money to cover the deficit. This is a responsibility. It’s a shared bipartisan responsibility. It’s been raised almost 70 times since 1965, almost always on a bipartisan basis. And no one party is responsible for the need to do this. I believe it should be a shared responsibility, not the responsibility of any one party.

       STEPHANOPOULOS: How about invoking the 14th Amendment as justification for continued borrowing? The text is pretty clear, the validity of the public debt of the United States should not be questioned. Why not invoke that?

       YELLEN: Well, because it’s Congress' responsibility to show that they have the determination to pay the bills that the government amasses. We shouldn't be in a position where we need to consider whether or not the 14th Amendment applies. That's a disastrous situation that the country shouldn't be in.

       I wouldn't want to see the president or myself faced with the decision about what to do if Congress refuses to let us pay the government's bills. You know what should you pay first? That's not a -- we have to reassure the world that the United States is fiscally responsible, and that they can count on us to pay our bills. And that's Congress' job to do that on a bipartisan basis.

       STEPHANOPOULOS: But, you know, there’s a pretty decent -- you don't want to be there, but there’s a pretty decent chance you’re going to be there on December 3rd. Is invoking the 14th Amendment on the table if Congress doesn't act?

       YELLEN: I don't believe any president has ever had to make a decision about what they would do if Congress failed to raise the debt ceiling. I can't imagine our being there on December 3rd. I have confidence that Speaker Pelosi and Leader Schumer will be able to manage this so that we don't face this situation.

       This would be a self-manufactured crisis that affects our economy at a time when we're recovering from the pandemic, we have a fragile recovery. It would be completely irresponsible and a self-inflicted wound that would affect businesses and households and the global economy and the status of the U.S. in the world. We shouldn't ever be in that position.

       STEPHANOPOULOS: Of course tied to this is the president's Build Back Better plan as well. Democrats are negotiating over the size of that plan right now, trying to get an agreement over around $2 trillion rather than the $3.5 trillion that President Biden proposed. Is the best way to do that by eliminating whole programs or trimming everything?

       YELLEN: Well, you know, different people, different members of Congress have different views on that. And there are active discussions taking place now among members of Congress, among Democrats with the White House, and we're trying to figure out what is the best way to construct a package that would have huge payoffs for America, would not only address our hard infrastructure needs, roads, bridges, ports, railroads, infrastructure for the electric grid, to promote -- to enable us to address climate change, but also programs that would really help children succeed, help families succeed, participate in the labor force, the Child Tax Credit, child care, early childhood education, community colleges. These are all important programs and they're going to be hard choices to negotiate in the coming weeks.

       STEPHANOPOULOS: Senator Manchin has proposed means testing some of the programs. Is that the best way to go or do you need to make them universally available so they have stronger support?

       YELLEN: Well, there is a trade-off there. We know that programs that are universal have tended to be long lasting and very popular. But there is also an argument for, you know, making sure that the highest income Americans perhaps don't get the benefit of a program that is most needed by those with lower income. And, you know, even with the Child Tax that we're sending monthly checks now, there are limits, income limits for receiving those.

       STEPHANOPOULOS: At some point, isn't the president and you -- aren't you going to have to weigh in on these arguments, on these disagreements?

       YELLEN: We're working and talking with members of Congress. And, you know, this is healthy give-and-take that’s going on right now among Democrats with different points of view on this. We do have a limit on the amount that we can spend and there are hard trade-offs that are going to have to be made.

       But I think everyone realizes, all the Democrats in Congress, that this is an historic opportunity that we have to invest in this -- in this country, to address some long-standing structural problems that have been holding back American families, making their lives difficult, making it hard for children to succeed, and making business more competitive, putting in place the investments that we need in this economy to help us -- to help us compete.

       And I believe that Democrats will come together and do what's necessary and take advantage of this opportunity.

       STEPHANOPOULOS: One of the big --

       YELLEN: It’s important they do so.

       STEPHANOPOULOS: One of the big changes you do support is this global minimum tax, the 15 percent global minimum tax. This week, over 130 nations now support it.

       Are you confident this will be included in the package, that Congress can get this passed?

       YELLEN: Yes. It's -- I am confident that what we need to do to come into compliance with the minimum tax will be included in a reconciliation package. I hope that we -- that it will be passed and we will be able to reassure the world that the United States will do its part.

       This is really an historic agreement. It’s something that is very important for American workers to stop what's been a decades-long race to the bottom on corporate taxation, where countries try to cut their taxes to attract our businesses, to make it harder to keep jobs in the United States.

       We should be competing on the basis of our strengths, of our people, of our ability to innovate, of our institutions, and not a race to the bottom that simply deprives all countries, the United States and other countries that participate in this race, of the resources we need to invest in our people and our economies.

       And this agreement to place a halt on how low tax rates can go so that all of us have the opportunity to collect tax revenue from successful corporations, and not just from workers. This is really something we need to make globalization work and to make it work for American workers.

       STEPHANOPOULOS: Madam Secretary, thanks for your time this morning.

       YELLEN: Thank you for having me, George.