Yellen Warns Treasury to Run Out of Funds June 5, Urges Debt Deal ‘As Soon As Possible’
Treasury Secretary Janet Yellen announced Friday the government could breach its debt limit on June 5 if the White House and Congress do not come to an agreement to raise or suspend it by then.
Yellen, who warned last week that the date was “highly likely” to hit in early June and as early as June 1, nailed down the specific deadline as tense negotiations in Washington remain ongoing.
“Based on the most recent available data, we now estimate 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,” Yellen wrote to House Speaker Kevin McCarthy (R-CA).
McCarthy and President Joe Biden and their surrogate negotiators have been locked in talks for days as the so-called X-date looms.
House Republicans passed a package in April to raise the debt ceiling through early next year in exchange for deep spending cuts and other concessions, and McCarthy has continued to demand aspects of that package while he works to come to an agreement with Biden and the Democrat-controlled Senate.
Republicans deeply involved in the discussions, including Reps. Patrick McHenry (R-NC) and Garret Graves (R-LA), ventured in and out of McCarthy’s office well into Friday evening of Memorial Day weekend when most other members had already left for recess.
McHenry, the Financial Services Committee chairman, told reporters Friday night as he headed into the speaker’s office there were “significant challenges ahead” and that he did not know if that meant a deal would come in “hours or days.”
Biden and Senate Majority Leader Chuck Schumer (D-NY) had for months refused to settle for any terms other than passing a “clean” debt ceiling hike, that is, an increase to the limit with none of Republicans’ desired conditions.
Once the House GOP demonstrated that even with its narrow majority the conference was able to unite around a plan, Biden was forced to begin talks with McCarthy on spending reductions despite the president saying for months that he would not budge on the matter.
Amid growing pressure now for the pair to come to a resolution, McCarthy has vowed, per House rules, to give colleagues three days to review the debt package if and when it is finalized.
Yellen’s initial alarm that the deadline could be June 1, coupled with the review process and other congressional procedures, appeared to place an increasingly difficult time constraint on lawmakers and Biden.
But with the president leaving for vacation in Delaware for the holiday weekend and Yellen now setting a firm date that is at least ten days out, pressure has appeared to ease slightly.
Some Republicans, particularly those in the House Freedom Caucus such as Rep. Andy Biggs (R-AZ), accused Yellen of partaking in “manipulation tactics” following her latest announcement, though McHenry took no issue with Yellen’s date on Friday.
Analysts such as Jim Bianco suggest Yellen has been operating on the conservative side, pointing to bond market prices that indicate the deadline could be a few days or even a week later than June 5.
Yellen in her letter to McCarthy reiterated that catastrophe could ensue should the nation begin to near a default on its debts.
“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,” Yellen wrote.
She added, “I continue to urge Congress to protect the full faith and credit of the United States by acting as soon as possible.”
Related: Deputy Treasury Sec’y: Biden’s “a No” on Using 14th Amendment to Raise Debt Limit, It “Can’t Solve Our Challenges Now”
Write to Ashley Oliver at [email protected]. Follow her on Twitter at @asholiver.