Yellen extends impending default deadline by 4 days to June 5
WASHINGTON – The United States has four more days to avoid defaulting on its debt.
Treasury Secretary Janet Yellen on Friday provided an updated timeline for when the government could run out of money, saying her projection is now June 5 based on the most recent data if Congress doesn’t. not increase or suspend the debt ceiling.
Yellen previously said the United States was set to default in early June and “as soon as June 1,” which targeted White House and Republican negotiators to reach a deal on the first of the month.
The sharper projection, outlined in a letter to House Speaker Kevin McCarthy, gives President Joe Biden and McCarthy more time to strike a deal to raise the debt ceiling and avoid a default as they head into Memorial Day weekend.
The two sides are set to strike a new deal to raise the debt ceiling through 2024 and cut spending, but they still have disagreements over expanding work requirements for social protection programs and l acceleration of authorizations for oil and gas projects.
Yellen said the Treasury is expected to make more than $130 billion in scheduled payments in the first two days of June, including payments to veterans and Social Security and Medicare recipients, leaving the department with “an extremely low level of resources”.
She said the government balance would be insufficient to meet about $92 billion in payments and transfers, including a planned investment in Social Security and Medicare trust funds of about $36 billion. .
Due to the impasse over the debt ceiling, Yellen said the Treasury has already seen borrowing costs rise significantly for securities maturing in early June.
Credit rating agency Fitch placed the country’s “AAA” rating on Wednesday on negative watch in anticipation of possible inaction by Congress to raise the debt ceiling.
Yellen urged Congress to act, saying a default would “cause serious hardship for American families, harm our position as a global leader, and raise questions about our ability to defend our national security interests.”
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Yellen warned of the June 5 date in a January letter to McCarthy
This isn’t the first time Yellen has referenced a June 5 date.
The Treasury Secretary sent a letter to McCarthy, R-California, earlier this year warning that a “period of suspension of debt issuance” could last until June 5 before the Treasury exceeds the debt limit.
The Treasury Department announced in January that it would begin taking “extraordinary measures” to prevent the country from defaulting on its debt obligations after the federal government hit its borrowing limit of $31.8 trillion. .
“The length of time that the extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the challenges of forecasting U.S. government payments and receipts months in advance,” Yellen wrote in January.
White House negotiators and House Republicans have nearly focused on a potential deal to cap annual discretionary spending for the next two years, keeping spending levels steady for many national programs. McCarthy said Republicans want next year’s budget to be lower than last year’s.
“It continues to be a very candid conversation about how we’re going to move forward,” Rep. Garret Graves, R-La., one of Republican top negotiators, said Friday afternoon. “We are on a financially unsustainable trajectory as a country, why would you do this to the next generation?”
More:US Treasury Department to Take ‘Extraordinary Measures’ as Government Approaches Debt Ceiling
Contact Joey Garrison on Twitter @joeygarrison.
USA Today
