United States Secretary of the Treasury Janet L Yellen has warned Congress that the country could run out of cash to pay its bills by June 1.
In a letter to members of Congressional leadership regarding debt limit, Yellen said that the US will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time.
This has prompted President Biden to invite House Speaker Kevin McCarthy to the White House to discuss raising the nation’s borrowing limit. The meeting is expected to take place on May 9 according to the New York Post.
Biden, 80, reached out to McCarthy, 58, to set a meeting with other lawmakers as the House speaker visited Jerusalem on Monday in celebration of Israel’s 75th anniversary, the White House said in a statement. Aside from McCarthy, Biden also reached out to Senate Majority Leader Chuck Schumer (D-NY), Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Hakeem Jeffries (D-NY). Biden told them that he wants to discuss passing a clean debt ceiling bill, according to CNN.
The US Treasury Secretary in her letter said the estimate is based on currently available data, as federal receipts and outlays are inherently variable, and the actual date that Treasury exhausts extraordinary measures could be a number of weeks later than these estimates.
Yellen said it is impossible to predict with certainty the exact date when Treasury will be unable to pay the government’s bills. “I will continue to update Congress in the coming weeks as more information becomes available. Given the current projections, it is imperative that congress”>Congress act as soon as possible to increase or suspend the debt limit in a way that provides longer-term certainty that the government will continue to make its payments,” she said.
In her letter she wrote: “Additionally, Treasury is suspending the issuance of State and Local Government Series (SLGS) Treasury securities. SLGS are special-purpose Treasury securities issued to states and municipalities to help them comply with certain tax rules.”
“When Treasury issues SLGS, they count against the debt limit. Treasury will take this action to manage the risks associated with the debt limit, but it is not without costs, as it will deprive state and local governments of an important tool to manage their finances.”
Yellen said the US has learned from past debt limit impasses that 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.