Treasury Secretary Janet Yellen updated her guidance Monday on when the United States could run out of money to pay the bills, warning congressional leaders that the nation could default as soon as June 1, the same date she projected in her letter to Congress two weeks ago.
White House and congressional leaders only recently started negotiating over the debt limit, but a deal has not yet been reached, and now that June 1 date is just two weeks away.
“[W]e still estimate that Treasury will likely 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 wrote.
She told lawmakers that there’s a large degree of uncertainty in her projection because the nation’s cash flow “could vary” from the estimates the department has made, based on receipts, outlays and debt. The Treasury Department has been using so-called extraordinary measures to help pay the bills since the U.S. hit the $31.4 trillion debt ceiling in January.
“The actual date Treasury exhausts extraordinary measures could be a number of days or weeks later than these estimates,” Yellen said, promising another update next week.
Even the threat of default is having an impact. Yellen noted Treasury has already seen borrowing costs “increase substantially” for securities maturing in early June.
President Biden and congressional leaders will meet again Tuesday to discuss the debt limit, a day before Mr. Biden is scheduled to leave for Japan. He spoke with them at the White House last week, but a second meeting on Friday was scrapped while talks continued at a staff level
House Speaker Kevin McCarthy signaled on Monday said so far, “nothing’s moved.” He also said negotiating parties must reach an agreement this weekend and said they were “nowhere near any of that.”
President Joe Biden, however, was more optimistic. “I really think there is a desire on their part as well as ours to reach an agreement, and I think we’ll be able to do it,” Biden said Sunday
Yellen, too, sounded hopeful in an interview with the Wall Street Journal posted Saturday, in which she said she’d been told that there were some areas of potential agreement. On “Face the Nation” on Sunday, White House Director of the National Economic Council Lael Brainard characterized the talks as serious and constructive.
Areas of compromise might include clawbacks of unused COVID funds, speeding up the permitting process and adding work requirements for some social programs. Raising the debt limit does not greenlight more spending but allows the government to pay the bills already incurred.
On Friday the Congressional Budget Office released its own analysis on the so-called X-date, similar to the Treasury timeline. The nonpartisan office warned there was a “significant risk” that the government would no longer be able to pay all its bills at some point in the first two weeks of June if Congress did not act.
Ellis Kim and Jack Turman contributed reporting.