WASHINGTON
The US will run out of money to pay its financial obligations by June 5, Treasury Secretary Janet Yellen told Republican leaders in the House of Representatives Friday amid ongoing negotiations to raise the debt limit.
The deadline is four days later than previous Treasury Department estimates, and Yellen told House Speaker Kevin McCarthy her department now estimates “that Treasury will have insufficient resources to satisfy the government’s obligations if Congress has not raised or suspended the debt limit by June 5.”
“We have learned from past 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 negatively impact the credit rating of the United States,” she wrote.
“In fact, we have already seen Treasury’s borrowing costs increase substantially for securities maturing in early June. If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” she warned.
The slight bump in time gives McCarthy’s team and their counterparts in the White House additional breathing room to hammer out a deal.
US President Joe Biden and McCarthy struck upbeat notes on Thursday that a deal was within reach. Biden has long maintained that lawmakers should raise the $31.4 trillion debt limit via a “clean bill,” but Republicans in control of the House have maintained any effort to do so be paired with spending cuts.
The limit was actually hit in January, but the Treasury Department has taken steps to ensure the US continues to pay its bill.
Yellen said the latest effort occurred Thursday when the agency carried out a $2 billion swap of Treasury securities between the Civil Service Retirement and Disability Fund and the Federal Financing Bank.
“While this measure has not been used since 2015 due to its limited size, the extremely low level of remaining resources demands that I exhaust all available extraordinary measures to avoid being unable to meet all of the government’s commitments,” the Treasury secretary wrote.
