Treasury Secretary Janet Yellen reaffirmed June 1 as a “hard deadline” for the United States to raise the debt ceiling or risk default.
“I indicated in my last letter to Congress that we expect to not be able to pay all of our bills in early June and possibly as soon as June 1. I will continue to update Congress, but I certainly haven’t changed my assessment,” Yellen said during an interview on “Meet the Press” on NBC “I think that’s a tough deadline.”
Yellen’s warning came hours after President Joe Biden delivered a grim assessment of the state of negotiations during his remaining hours in Japan. Biden issued a stark warning Sunday, ahead of his high-stakes phone call with House Speaker Kevin McCarthy, that congressional Republicans could use a national default to damage him politically, and admittedly that time has run out to use potential unilateral measures to raise the federal borrowing limit. , a sharp shift in tone days before the deadline for an agreement.
Reflecting this shifting tone, the Treasury Secretary emphasized that there would be some bills that would not be paid, if the debt ceiling was not raised.
“There will be hard choices if the debt ceiling is not raised,” she said. “And, you know, I would simply say since 1789, the United States has had a history of paying its bills on time. That’s what the world wants to see an ongoing commitment to do. That’s what lies behind U.S. Treasury bonds as the safest investment on the planet. And it is. An unacceptable situation for us not to be able to pay our bills.”
Yellen downplayed the impact of tax receipts or spending that delays Date X past early June, saying the odds are “extremely low,” going through June 15 without defaulting if no congressional intervention occurs.
On the sticking points, Yellen pointed to the Republicans’ insistence on taking revenue off the negotiating table among other areas.
“The thing that worries me deeply is that they were even in favor of removing the funding that was provided to the Internal Revenue Service to eliminate tax fraud,” she said.
Yellen agreed with the president’s assessment that invoking the Fourteenth Amendment, “it doesn’t seem like something could be used appropriately in the circumstances,” given the legal uncertainty and timeframe. She played down the possibility of some additional unilateral action the president could take, instead saying that tough choices will be made if no deal is reached and that some bills will not be paid.
“It is my sincere hope that Congress will raise the debt ceiling,” she said. “There will be no acceptable outcomes if the debt ceiling is not raised, no matter what decisions we make.”
However, Pennsylvania Republican Rep. Brian Fitzpatrick said there may be some leeway to override the June 1 deadline.
“June 1st, according to Secretary Yellen, is probably the earliest possible date,” he told CBS News, adding, “We have enough cash flow” to “pay the interest on our debt.”
“We’ll start to see state tax returns come in the second week of June, so I think we’re OK with that,” Fitzpatrick said.
Fitzpatrick appeared with Democratic Rep. Josh Gottheimer of New Jersey. Both Gottheimer and Fitzpatrick said they should still treat June 1 as the deadline even if there is some leeway.
“Regardless of whether we have a few more days, the bottom line is we cannot continue to play chicken with the full faith and credit of the United States of America. The stakes, as we all know, are very high in terms of paying off our debts and what that might mean for our reputation,” Gottheimer said. In the world and it is clear that the government of China would love us to default.
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