Treasury Secretary Janet Yellen predicted on Monday that the United States could run out of cash to pay bills as early as June 1.
Yellen made the estimate in a letter to House Speaker Kevin McCarthy (R-CA), writing that the nation would hit its debt ceiling by at least early June based on current data.
“We will not be able to continue to meet all government obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt ceiling by then,” he said. -she writes.
Yellen warned that “waiting until the last minute to suspend or increase the debt ceiling can seriously damage business and consumer confidence, increase short-term borrowing costs for taxpayers and negatively impact credit ratings.” of United States credit.
Yellen cited past “standoffs,” a reference to the current standoff between McCarthy and Democratic leaders President Joe Biden and Sen. Chuck Schumer (NY), as evidence that congressional action was needed to avert a crisis. economic.
McCarthy defied expectations by successfully unifying House Republicans around a plan to lower the debt ceiling last week. The chamber narrowly passed the Limit, Save, Grow Act along partisan lines after tense negotiations in the GOP conference.
The bill would increase the debt ceiling in exchange for substantial spending cuts that would save the government about $4.8 trillion over ten years.
Schumer, however, declared the bill, which he calls the “Default on America Act,” dead upon arrival in the Senate, despite offering no viable alternative to solving the impending disaster.
Biden had until Monday refused to negotiate with McCarthy on the debt ceiling. But, in a move that coincided with Yellen’s letter, the president relented and reached out to McCarthy, Schumer, Senate Minority Leader Mitch McConnell (R-KY) and House Minority Leader Hakeem Jeffries (D-NY) to meet this month on the matter, the White House has confirmed.
Dragging Biden to the negotiating table is a victory for McCarthy after the president insisted he would not cooperate with House Republicans on the issue of the country’s borrowing capacity.
Both Biden and Schumer have demanded a “clean” debt ceiling hike — that is, raising the debt ceiling without the spending cuts Republicans seek.
McCarthy vowed to reject that option, however, pointing to exorbitant government spending and an inflationary environment under Biden as a reason to attach conditions to any increase or suspension of the debt ceiling.
Yellen wrote to the GOP leader: “If Congress fails to raise the debt ceiling, it would cause serious hardship for American families, damage our position as a global leader and raise questions about our ability to defend our interests. of national security.
McCarthy responded to Yellen’s letter in a statement late Monday, sharply criticizing the Biden administration for three months of “inaction.”
“After three months of inaction by the Biden administration, the House has acted, and there is a bill in the Senate as we speak that would end default risk,” McCarthy said. “The Senate and the President need to get to work – and soon.”
Write to Ashley Oliver at firstname.lastname@example.org. Follow her on Twitter at @asholiver.