Treasury Department Secretary Janet Yellen warned lawmakers Monday that the nation will run out of funds to pay its debts by “early June, and potentially as early as June 1.”
In a letter to Speaker Kevin McCarthy (R-Calif.) sent a little more than 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 on a deadline, saying early June remained the deadline for Congress to take action.
“In my May 15 letter, I noted that our best estimate was that Treasury would be unable to continue to satisfy all of the government’s obligations by early June if Congress does not raise or suspend the debt limit before that time,” she wrote.
“In that letter, I also noted that while it is impossible to predict with certainty the exact date when Treasury will be unable to pay all the government’s bills, I would continue to update Congress as more information becomes available. With an additional week of information now available, I am writing to note that we estimate that it is highly likely that Treasury will no longer be able to satisfy all of the government’s obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1,” Yellen concluded.
It’s the latest notice from Yellen warning the nation risks defaulting as soon as the start of June and putting pressure on lawmakers to move quickly.
There has been some skepticism among Republicans as to whether June 1 is the actual “X-date” but McCarthy has pointed to it when discussing the potential timeline for Congress to pass a debt limit increase.
“They decide when that date is,” McCarthy told reporters on Monday. “The president may have more information on that, but she has been very clear.”
The notice comes as projections released by the Congressional Budget Office (CBO) have also warned the nation risks defaulting on its debt early next month.
McCarthy had previously hoped negotiators could strike a deal in principle this past weekend, while eyeing a floor vote this week. But Republicans are demanding spending cuts in exchange for raising the debt ceiling, and the two sides are far apart on a number of sticking points.
“I think the Senate could probably act faster than I thought in the past,” McCarthy said. “But we’re going to need a couple of days to write it and to make sure that everyone’s able to read it and vote on it.”
Markets have begun to show some unease as Washington moves closer to the June 1 deadline.
Yellen’s new warning again suggests that the government will run out of the ability to pay all its bills as early as next week, which could force a default or the inability of the government to make certain payments.
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” Yellen wrote.
“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” she continued.
“I continue to urge Congress to protect the full faith and credit of the United States by acting as soon as possible.”
Aris Folley contributed. Updated at 4:59 p.m.