Debt ceiling: Yellen says Treasury to run out of funds by ‘early June’ and possibly ‘June 1’
On Monday Janet Yellen the secretary of the Treasury warned Congress
that the US could not have enough money to pay its obligations by early June perhaps as early as June 1.
Yellen gave no new information on a date in a letter to Speaker Kevin McCarthy R Calif that was released a little more than an hour before his planned White House meeting with President Biden to address the debt limit. She said that early June remained the limit for Congress to take action.
She added, “In my May 15 letter, I suggested that, if Congress did not boost or delay the debt cap before that time, Treasury will not be able to continue to meet all of the government’s responsibilities by early June.
Despite the fact that it is difficult to pinpoint with precision the precise day on which Treasury will be unable to cover all of the government’s payments I also noted in that letter.
I would keep Congress updated as new information became available.
If Congress does not increase or suspend the debt ceiling by early June maybe as early as June 1 we predict that Treasury will most likely not be able to pay all of the government’s commitments. This is because we now have an extra week of data available.
Republicans want spending cutbacks in return for lifting the debt ceiling, but there are many problems where they and Democrats cannot agree.
As Washington approaches the June 1 date for a deal that Yellen had previously set, the markets have started to show some nervousness.
Her latest warning suggests once again that the government would soon be unable to meet all of its responsibilities, maybe as soon as next week. This might end in a failure or the government’s inability 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, said Yellen.
She noted that failing to raise the debt ceiling would be very difficult for American families damage our nation’s standing as a global leader and cast question on our ability to protect our national security interests.
I never stop pleading with Congress to take swift action to preserve America’s full faith and credit.