Janet Yellen warns that Congress must address the US debt ceiling by June 5

Janet Yellen warns that Congress must address the US debt ceiling by June 5

(News) — If Congress does not address the debt limit by June 5, the US Treasury Department will not have enough funds to pay all of the nation’s obligations in full and on time, the Treasury Secretary warned Friday, Janet Yellen.

“Based on the most recent data available, we estimate that the Treasury will not have sufficient resources to meet the Government’s obligations if Congress does not raise or suspend the debt limit by June 5,” he wrote in a letter to the president. House Speaker Kevin McCarthy and other congressional leaders.

The latest missive comes as President Joe Biden and House Republicans continue to try to reach a deal to address the debt ceiling before the United States defaults, wreaking havoc on the global economy and system. financial. Negotiators are moving closer to a deal, but several sticking points remain, including the size of the spending cuts and the expansion of work requirements in social safety net programs.

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The new deadline gives the president and lawmakers a few more days to craft a package.

Until now, Yellen has warned Congress that the so-called “X-date” — when the US cannot meet all of its obligations — is likely to come in early June, and possibly as soon as June 1. Earlier this week, he said he would try to give lawmakers a more precise date.

Some Republicans in Congress have been questioning Yellen’s projections, particularly those of a potential June 1 deadline, saying she should be more transparent in her forecasts.

large overdue bills

Treasury will send more than $130 billion in payments in the first two days of June, including to veterans and Social Security and Medicare beneficiaries. This will leave the agency with “an extremely low level of resources,” Yellen wrote.

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During the week of June 5, the Treasury is scheduled to make payments and transfers estimated at US$92 billion, but projects that it will not have the resources to meet all of these obligations, he continued.

Since the US hit its debt ceiling in January, the Treasury has been forced to rely on cash and extraordinary measures to pay the bills until Congress raises or suspends the debt ceiling.

The agency had $38.8 billion in cash on hand as of Thursday, according to federal data. The amount hovers around that number as the Treasury receives revenue and makes payments, but the balance has dwindled from the $238.5 billion it had at the start of the month, when coffers were relatively full from April’s tax collection. .

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The Treasury had about $67 billion remaining from extraordinary measures as of Wednesday, up from $220 billion at the end of January.

Yellen’s new estimate is in line with projections from other groups, including the Congressional Budget Office. Many claim that the X date will likely fall in early June.

This story has been updated with additional information.

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