United States Treasury Secretary Janet Yellen gave congressional lawmakers a momentary reprieve on Friday, pushing back a projected debt ceiling deadline to June 5. Previously, Yellen had estimated that funds could run out by the first of the month.
“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 in a letter to Congressional leaders. She added that the Treasury Department is scheduled to make $130 billion in payments on the first two days of the month, including payments for Social Security and Medicare, which will “leave Treasury with an extremely low level of resources.”
Yellen’s letter comes as negotiators in Congress and the White House have still failed to come to an agreement to raise the $31.4 trillion debt ceiling. Republicans are determined to extract spending cuts and impose work requirements on recipients of social services. Though President Joe Biden claimed on Friday a deal was “very close,” the weeks-long negotiations continued into the weekend. On Saturday morning, Speaker of the House Kevin McCarthy said Republicans were “closer to an agreement” but didn’t offer a timeline for an ultimate compromise.
In her letter, Yellen reiterated that a default would “cause severe hardship to American families.” Earlier this month, she warned that the country was facing “economic catastrophe” if congressional leaders failed to come to an agreement. On Wednesday, one of three major ratings agencies put the U.S.’s AAA credit rating on “negative watch.”
The few extra days offer a little breathing room, but not much. “No one can guarantee there won’t be a default, if for no other reason than the clock is ticking down here pretty quickly,” G. William Hoagland, senior vice president at the Bipartisan Policy Center, told The New York Times on Friday. “We are on thin ice in a big way.”
Jack McCordick
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