If Congress does not address the debt ceiling by June 5, the US 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 available data, we now estimate that Treasury will have insufficient resources to satisfy the government’s obligations if Congress has not raised or suspended the debt limit by June 5,” she wrote in a letter to House Speaker Kevin McCarthy and other congressional leaders.
The latest missive comes as President Joe Biden and House Republicans continue to try to hammer out a deal to address 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 an agreement, but several sticking points remain, including the size of spending cuts and broadening of 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 satisfy all its obligations, would likely 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 been questioning Yellen’s projections, particularly the potential June 1 deadline, saying she should be more transparent in her forecasts.
Treasury will send out more than $130 billion in payments in the first two days of June, including ones to veterans and Social Security and Medicare recipients. This will leave the agency with “an extremely low level of resources,” Yellen wrote.
During the week of June 5, Treasury is scheduled to make an estimated $92 billion of payments and transfers – but it projects that it will not have the resources to meet all these obligations, she continued.
Ever since the US hit its borrowing cap in January, Treasury has been forced to rely on cash and extraordinary measures to pay the bills until Congress either raises or suspends the debt ceiling.
The agency had $38.8 billion of cash on hand, as of Thursday, according to federal data. The amount bounces around as Treasury takes in revenue and makes payments, but the balance has declined from $238.5 billion at the start of the month, when the coffers were relatively flush from tax collections in April.
Treasury had about $67 billion remaining in extraordinary measures as of Wednesday, down from around $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 the X-date will likely fall in early June.
This story has been updated with additional information.