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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 will not have sufficient resources to meet the government’s obligations if Congress has not raised or suspended the debt limit by June 5,” he said. he wrote in a letter to Speaker of the House Kevin McCarthy and other congressional leaders.
The latest missive comes as President Joe Biden and House Republicans continue to try to reach a deal to address the debt ceiling before the United States defaults, which would wreak havoc on the global economy and the financial system. Negotiators are moving closer to a deal, but several sticking points 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 been warning Congress that the so-called X-date, when the US would be unable to meet all of its obligations, would likely come 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 been questioning Yellen’s projections, especially 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. That will leave the agency with “an extremely low level of resources,” Yellen wrote.
During the week of June 5, the Treasury plans to make about $92 billion in payments and transfers, but anticipates that it will not have the resources to meet all of these obligations, he continued.
Since the United States reached its debt ceiling in January, the Treasury has been forced to rely on cash and emergency measures to pay the bills until Congress 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 rebounds as the Treasury collects revenue and makes payments, but the balance has declined from $238.5 billion earlier in the month, when coffers were relatively detached from tax collections in April.
The Treasury had about $67 billion remaining in extraordinary measures as of Wednesday, down from $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 will likely fall in early June.
This story has been updated with additional information.
