Treasury Secretary Janet Yellen warned lawmakers Monday that the nation will run out of money to pay its debt by “early June, possibly June 1st.”
In a letter to House Speaker Kevin McCarthy (R-Calif.) sent just over an hour before the House GOP leader’s scheduled White House meeting with President Biden to discuss the debt ceiling, Yellen offered little new information about the deadline, saying in the early June. Congress has a deadline for action.
“In my May 15 letter, I noted that our best estimate is that the Treasury Department will not be able to continue to meet all of the government’s obligations by early June if Congress does not raise or suspend the debt limit before then,” she wrote.
In that letter, I also noted that while it is impossible to predict with certainty the exact date when the Treasury Department will not be able to pay all of the government’s bills, I will continue to update Congress as more information becomes available. With an additional week of information now available, I am writing to indicate that we estimate that it is very likely that the Treasury Department will not be able to meet all of the Government’s obligations if Congress does not take action to raise or suspend the debt limit as early as June, possibly as early as June 1,” Yellen concluded.
It’s the latest notice from Yellen warning the nation of the dangers of default once June begins and pressuring lawmakers to move quickly.
There was some skepticism among Republicans about whether June 1 was the actual “deadline” but McCarthy referred to it when discussing Congress’ possible timetable for passing the debt limit increase.
“They’re deciding when that date will be,” McCarthy told reporters on Monday. The chief might have more information on that, but she was very clear.
The notice comes as projections from the Congressional Budget Office (CBO) warned the nation of the risks of defaulting on its debt as early as next month.
McCarthy previously hoped negotiators could reach an agreement in principle last weekend, while looking forward to a vote in the room this week. But Republicans are demanding spending cuts in exchange for a higher debt ceiling, and the two sides are far apart on a number of sticking points.
“I think the Senate can probably act faster than I thought in the past,” McCarthy said. “But we’ll need two days to write it and to make sure everyone can read it and vote on it.”
Markets are starting to show some anxiety as Washington approaches the June 1 deadline.
Yellen’s new warning again indicates that the government will run out of capacity to pay all of its bills as early as next week, which could force the government into default or the government’s inability to make certain payments.
“We have learned from previous debt limit impasses that waiting until the last minute to suspend or increase a debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively affect the credit rating of the United States,” Yellen wrote.
She continued, “If Congress fails to increase the debt limit, it will cause great hardship to American families, damage our global leadership position, and raise questions about our ability to defend our national security interests.”
“I continue to urge Congress to protect the faith and credit of the United States by acting as quickly as possible.”
Aris Foley contributed. Updated at 4:59 PM
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