U.S. Faces ‘Elevated Risk’ of Default in Early June, a New Report Warns
The US will pay its June 2-13 bills if Congress doesn’t raise or suspend the country’s debt ceiling, according to an analysis released Tuesday by the influential bipartisan policy center. face a “high risk” of cash shortages. A think tank that closely tracks federal spending.
The analysis highlights the growing likelihood that the US will default on its debt as soon as next week. This comes amid negotiations between the White House and Congressional Republicans to reach an agreement that would also remove the $31.4 trillion borrowing cap.
“At the beginning of June, the Treasury will be skating on very thin ice, and it will only get thinner with each passing day,” said Shai Aqabath, director of economic policy at the center. rice field. “Of course, the problem with skating on thin ice is that sometimes you make mistakes.”
The center said that after Memorial Day, the Treasury Department will operate with “dangerously low” cash on hand, and risks will rise each day in June. Since the U.S. effectively hit its debt ceiling in January, the department has engaged in what are known as extraordinary fiscal maneuvers to delay defaults that are expected to be exhausted soon. .
If the federal government can collect enough revenue by the June 15 quarterly tax deadline, it could get a reprieve, the center said. In that case, the default, the so-called X date, may be pushed back to July.
But Treasury Secretary Janet L. Yellen said this week that she doesn’t think the federal government will have enough cash by mid-June.
In a letter to Congress on Monday, Yellen reiterated her prediction that X-Date could arrive as early as June 1. Her warning did not include warnings contained in previous updates that suggested the government’s cash reserves could be depleted. It may continue for several more weeks. Instead, she emphasized the urgency of the situation.
“The failure of Congress to raise the debt ceiling would cause serious hardship for American families, undermine America’s position as global leader, and call into question our ability to defend our national security interests,” Yellen said. Let’s go,” he said.