Treasury Secretary Janet Yellen projected Monday that the U.S. could run out of cash to pay its bills as early as June 1.
Yellen made the estimation in a letter to House Speaker Kevin McCarthy (R-CA), writingthat the nation would reach its debt ceiling by at least early June based on current data.
“We 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,” she wrote.
Yellen warned 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.”
Yellen cited past “impasses,” a reference to the current standoff between McCarthy and Democrat leaders President Joe Biden and Sen. Chuck Schumer (NY), as evidence that congressional action was needed to stave off an economic crisis.
McCarthy defied the expectations of some by successfully unifying House Republicans around a plan to address the debt ceiling last week. The chamber narrowly passed the Limit, Save, Grow Act along partisan lines after tense negotiations within the GOP conference.
The bill would raise the debt limit in exchange for substantial spending cuts that would save the government an estimated $4.8 trillion over ten years.
Schumer, however, has declared the bill, which he calls the “Default on America Act,” dead on arrive in the Senate, despite offering no viable alternatives to solve the looming catastrophe.
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