The Treasury Department now believes the nation could default on its debts as early as one month from Monday, according to a new letter Sec. Janet Yellen wrote to Congress.
‘In my January 13 letter, I noted that it was unlikely that cash and extraordinary measures would be exhausted before early June. After reviewing recent federal tax receipts, our best estimate is that we will be unable to satisfy all of the government’s obligations by early June, and potentially as early as June 1,’ Yellen wrote.
Speaker Kevin McCarthy and President Biden are still at an impasse over how to move forward on raising the nation’s $31.4 trillion borrowing limit, and have not met to discuss the matter in three months.
Republicans insist they will not allow the debt ceiling to be raised without spending cuts, and Democrats insist the debt ceiling should not be used as leverage.
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Any agreement over how to move forward would have to first be worked out between the speaker and the president. The GOP-led House and Democrat-led Senate would have to get on board and pass it and send it to the president’s desk, all in as little as a month.
Meanwhile, the House is in session just 12 days between now and June 1.
‘Given the current projections, it is imperative that Congress act as soon as possible to increase or suspend the debt limit in a way that provides longer-term certainty that the government will continue to make its payments,’ Yellen said. She stressed the exact date the government will run out of money for its payments is imprecise because of the variability of federal tax receipts.
Last week the House passed sprawling debt ceiling legislation that Senate Democrats have insisted is dead on arrival in their chamber.
