Treasury expects to run out of cash on June 5
Treasury Secretary Janet L. Yellen said Friday that the United States could run out of money to pay its bills on time by June 5. debt limit.
The letter provided the most specific timeline yet for when the United States could run out of money and offers a little wiggle room from the June 1 date that many thought was the so-called X-date.
Ms. Yellen’s letter comes as the White House and House Republicans scramble to agree on a deal that would lift the country’s $31.4 trillion borrowing ceiling and prevent the United States from default on their debts. The Treasury Department reached the debt limit on Jan. 19 and has since employed accounting maneuvers to ensure the United States continues to pay its bills on time.
For months, Ms. Yellen warned lawmakers that the US could run out of cash to pay all its bills on time, starting in June and as early as June 1. more than $130 billion in scheduled payments during the first two days of June — including payments to veterans and Social Security and Medicare recipients — leaving the Treasury Department with “an extremely low level of resources.”
“The failure of Congress to raise the debt limit would cause serious problems for American families, damage our global leadership position and raise questions about our ability to defend our national security interests,” Ms. Yellen wrote.
Although negotiators are in talks 24 hours a day, no deal has yet been announced. Still, the contours of an agreement between the White House and Republicans are beginning to take shape. That deal would raise the two-year debt limit while imposing strict limits on discretionary spending not related to the military or veterans for the same time period.
While officials have been negotiating, the federal government is fuming. The cash balance of the Ministry of Finance fell to $38.8 billion on Thursday, when the United States was running out of cash to meet its financial obligations.
The tight deadline is warning lawmakers that a deal must be struck quickly.
“We have to be in the closing hours because of the timeline,” said Representative Patrick McHenry, a North Carolina Republican involved in the talks. “I don’t know if it’s in two or three days, but it has to come together.”
Biden administration officials continued to downplay the possibility that the Treasury Department could continue to avoid a default beyond the so-called X-date by prioritizing payments to bondholders. They also rejected provocative moves, such as invoking the 14th Amendment as a way to continue borrowing, and instead reiterated calls for Congress to lift the debt limit.
“Congress has the ability to do that, and the president is urging them to act on that as soon as possible,” Wally Adeyemo, the deputy secretary of the treasury, told CNN Friday.
Ms. Yellen said earlier this week that she would try to include more precision in her future updates on when a default might occur. Some House Republicans questioned whether bankruptcy could really be approaching that quickly, and they have called on the Treasury Secretary to appear before Congress and present her full analysis.
Luke Broadwater reporting contributed.