If Congress does not address the debt ceiling by June 5, the U.S. Treasury Department will not have enough funds to pay all of the nation’s obligations in full and on time, Treasury Secretary Janet Yellen said Friday.
“Based on the most recent data available, we now estimate that the Treasury Department will have insufficient resources to meet the government’s obligations if Congress has not raised or suspended the debt limit by June 5,” she wrote in a letter to House Rep. Kevin McCarthy and other. congressional leaders.
The latest letter comes as President Joe Biden and House Republicans continue to try to strike a deal to fix the debt ceiling before the US defaults on its obligations, which would wreak havoc on the global economy and financial system. Negotiators are moving closer to a deal, but several issues remain, including the size of spending cuts and expanding work requirements in safety net programs.
The new deadline gives the president and lawmakers a few more days to craft a package.
Until now, Yellen has warned Congress that the so-called X-date, when the United States would not be able to meet all its obligations, would probably arrive in early June – and as soon as June 1. Earlier this week, she said she would try to give lawmakers a more precise date.
Some Republicans in Congress have questioned Yellen’s forecasts, particularly the potential June 1 deadline, saying she should be more transparent in her forecasts.
The Treasury will send more than $130 billion in payments in the first two days of June, including those to veterans and Social Security and Medicare beneficiaries. This will leave the agency with “an extremely low level of resources,” Yellen wrote.
During the week of June 5, the Treasury Department is scheduled to make an estimated $92 billion in payments and transfers — but it anticipates it will not have the resources to meet all of those obligations, she continued.
Ever since the US hit its debt ceiling in January, the Treasury Department has been forced to rely on cash and emergency measures to pay the bills until Congress either raises or suspends the debt ceiling.
The agency had $38.8 billion in cash on hand as of Thursday, according to federal data. The amount bounces around as the Treasury collects revenue and makes payments, but the balance is down from $238.5 billion at the start of the month, when coffers were relatively buoyant from tax collections in April.
The Treasury had about $67 billion left in emergency measures as of Wednesday, down from about $220 billion at the end of January.
Yellen’s new estimate is in line with projections from other groups, including the Congressional Budget Office. Many have said that the X-date is likely to fall in early June.
This story has been updated with additional information.