US Treasury Secretary Janet Yellen has sent a letter to Republican House Speaker Kevin McCarthy warning that the federal government may hit the spending cap by June 1 if Congress does not raise the debt limit.
In the letter released Monday, Yellen said the data points available through early June are when the government won’t be able to make ends meet if Congress fails to raise the cap there.
“Given current projections, it is imperative that Congress move as quickly as possible to raise or suspend the debt ceiling in a manner that provides long-term certainty that the government will continue to make its payments,” he said. The message is read.
Although Yellen’s letter suggested that the US could default as soon as June 1, the Treasury secretary also noted that “it is impossible to predict with certainty the exact date when the Treasury will not be able to pay the government’s bills.” .
Monday’s post comes as US President Joe Biden has reportedly called a May 9 meeting with Democratic and Republican leaders to discuss spending and a debt limit.
Experts have warned that a default would have catastrophic effects on the US economy: it could lead to a downgrade in the US credit rating, which would lead to higher interest rates and a possible recession.
Raising spending limits in the United States is largely a routine procedure, but it has become increasingly controversial in recent years. To raise the debt ceiling this year, Republicans in Congress are pushing for deep cuts to social programs in exchange for their support.
The Biden administration has called for raising the debt ceiling unconditionally, noting that discussions about different programs can be piecemeal during annual budget negotiations.
His concerns were echoed by fellow Democrats after Yellen’s letter, which called for an increase in the “clean” debt limit without compromise or litigation.
We have about a month left before the United States pays off its debt. Let’s be clear – this is not new spending,” Virginia Sen. Mark Warner tweeted Monday. “It’s about paying bills we’ve already incurred. We cannot unleash economic disaster on the American people. »
Last week, the Republican-led House of Representatives passed a bill approving a $1.5 trillion increase in the debt ceiling in exchange for $4.5 trillion in spending cuts for programs such as health care for low-income communities, renewable energy, and transportation.
The bill is considered dead on the way to the Democratic-controlled US Senate, and Biden has said he will veto it. But its passage through the House is seen as a victory for McCarthy, who has since called on Democrats to “do their job” to approve the bill and avoid default.
“In our history, we have never defaulted on our debts or failed to pay our bills,” White House press secretary Karen Jean-Pierre said in a statement after the vote.
President Biden will never force the middle class and working families to shoulder the burden of tax cuts for the wealthy the way this bill does. The President made it clear that this law has no chance of being passed. »
The Congressional Budget Office also said on Monday that it sees an increased risk that the government will run out of money in early June due to lower-than-expected tax revenues.