Treasury Secretary Janet L. Yellen said Friday that the U.S. will run out of money to pay its bills on time by June 5, underscoring the urgency of congressional leadership to reach an agreement to raise or suspend the debt. He said he would keep it but move the goalposts slightly. limit.
The letter provided the most accurate date yet for when US cash is likely to run out. Yellen has previously said the U.S. could hit its so-called X-date – the moment when there is not enough money to pay all the bills on time – as early as June 1.
not yet, letter The report to lawmakers reveals the dire financial situation facing the Treasury Department. The federal government needs to pay out more than $130 billion on time in the first two days of June, including payments to veterans, Social Security and Medicare beneficiaries.
These payments would leave the Treasury with “very low levels of resources”. Yellen went on to detail that billions of dollars in cash transfers, spending and investments in programs like Social Security and the Medicare Trust Fund would be required, further draining cash reserves.
“Our projected resources will not be sufficient to meet all of these obligations,” Yellen said.
Ms Yellen’s letter comes as the White House and House Republicans race for a deal to remove the $31.4 trillion national borrowing cap and prevent the United States from defaulting on its debts. Since the Treasury Department reached its statutory debt ceiling on January 19 and cannot increase the U.S. outstanding debt any further, it has taken an accounting measure, known as the “temporary measure,” to ensure that the U.S. continues to pay its bills on time. I’m taking a tactic.
For months, Yellen has warned lawmakers that the United States could run out of cash to pay all its bills on time in early June, or as early as June 1.
Yellen said earlier this week that future updates will try to include more accurate information about when a default will occur. Some Republicans in the House have expressed doubt that default is approaching so quickly and have called on the Treasury secretary to appear before Congress to present a full analysis.
Earlier this week, members of the House Liberals, a group of Republican conservatives, sent a letter to California Republican Speaker Kevin McCarthy telling Yellen of his prospects that the United States would support U.S. policy. He urged party leaders to demand that they be fully justified. States could run out of money as early as June 1. They accused Yellen of “timing manipulation” and suggested that she should not trust her predictions because she is wrong about how high inflation will go.
Other independent analyzes also forecast early June as the time when the US is most likely to reach X-date. The Bipartisan Policy Center said earlier this week that the U.S. faces a “high risk” of running out of cash to pay bills between June 2 and 13 unless Congress raises or suspends the debt ceiling. said there is.
Negotiators have been negotiating around the clock, but no deal has yet been announced. Still, the outlines of an agreement between the White House and Republicans are taking shape. The deal would raise the debt ceiling for two years, while imposing strict limits on discretionary spending not related to the military or veterans during the same period.
The federal government is in smoke as officials continue to negotiate.Treasury cash balances decreased $38.8 billion It happened Thursday as the US is running out of cash to pay to meet its fiscal obligations.
With the deadline looming, lawmakers have warned that an agreement must be reached soon.
Rep. Patrick McHenry, a North Carolina Republican who is participating in the talks, said, “Because of the schedule, it has to be close to closing time.” “I don’t know if it will be the next day or within a few days, but we have to get it together.”
Biden administration officials continued to downplay the possibility that the Treasury could avoid defaults beyond the so-called X-date by prioritizing payments to bondholders. He also denied provocative measures, such as invoking the 14th Amendment, as a way to continue borrowing, and instead repeated calls for Congress to remove the debt ceiling.
Deputy Treasury Secretary Wally Adiemo told CNN Friday that “Congress has the ability to do that and the president is asking Congress to act as soon as possible.”
In her letter, Yellen also described additional accounting manipulations, known as “temporary measures,” that she was taking to delay a possible default until June 5. The action included moving $2 billion in Treasury bills between the Civil Servants Retirement and Disability Fund. and the Federal Financial Bank.
“Remaining resources are so low that we must exhaust all available extraordinary measures to avoid falling short of all government commitments,” Yellen said.
Financial markets have become more volatile as the deadline for the U.S. to avert a possible default is approaching. Fitch Ratings announced this week that it will put the nation’s highest AAA credit rating up for review. Possibility of downgrading. Another rating agency, DBRS Morningstar, made a similar assessment on Thursday.
In her letter, Yellen said the conflict was already putting strain on financial markets.
“We believe that past debt limit deadlocks mean that waiting until the last minute to suspend or raise debt limits will seriously damage business and consumer confidence, raise short-term borrowing costs for taxpayers, We have learned that it can negatively impact the credit rating of the U.S. state,” she wrote.
Luke Broadwater contributed to the report.
