NewsRescue
Without a rise in the debt limit, US Treasury Secretary Janet Yellen warned on Monday that the federal government could run out of cash to pay its obligations as soon as next month.
“After reviewing recent federal tax receipts, our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time,” Yellen wrote in a letter to House and Senate leaders.
She encouraged lawmakers “to protect the full faith and credit of the United States by acting as soon as possible.”
“We have learned from previous debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and harm the United States’ credit rating,” Yellen wrote.
“Failure by Congress to raise the debt limit would cause severe hardship to American families, harm our global leadership position, and raise concerns about our ability to defend our national security interests,” she said.
The Congressional Budget Office (CBO) also issued an update on Monday, warning of a “significantly greater risk that the Treasury will run out of funds in early June” due to lower-than-expected tax revenues. The CBO had predicted that a default would occur between July and September.
The warnings follow a months-long stalemate in talks between the White House and Republicans in Congress on the issue.
Yellen has been expressing concern since the United States reached its $31.4 trillion debt ceiling in January. She informed Congress at the time that the Treasury had begun taking “extraordinary measures” to avoid a federal government default.
President Joe Biden called all four congressional leaders on Monday and invited them to a meeting on the subject on May 9.
