US has until June 5 to act on debt ceiling, says treasury chief
The US is at risk of a potential default if it does not reach an agreement about its debt ceiling.
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US Treasury Secretary Janet Yellen speaks during a meeting with Japan's Finance Minister Shunichi Suzuki at the G7 Finance Ministers and Central Bank Governors' Meeting at the Toki Messe convention center in Niigata, Japan, May 13, 2023 (AP)
US Treasury Secretary Janet Yellen stated in a letter on Friday afternoon that the United States has a few more days than anticipated before it runs out of money.
Yellen gave a firm date for the first time, saying that June 5 is the new deadline to take action or risk going over the debt ceiling. She was less precise previously, indicating that the breach may happen "potentially as early as June 1."
The Treasury hit the borrowing limit in January, and since then, it has been taking "extreme measures" to pay its debt.
Yellen told Congressional leaders that "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."
The United States is rapidly closing in on total financial chaos, as the two ruling parties have failed so far to reach a borrowing ceiling consensus.
The debate over raising the debt ceiling has become an annual occurrence; however, this year, Congress is in a race against time while Republicans and Democrats are yet to agree on the terms.
US House Speaker Kevin McCarthy and President Joe Biden said Monday in their first one-on-one talks in months to avoid a calamitous debt default were "productive", but disagreements were still blocking any possible deal.
The two parties have been settling their disagreements about expenditure caps. But according to two individuals involved with the negotiations, the Republican desire to impose stricter work requirements for Americans receiving federal benefits like SNAP, the Supplemental Nutrition Assistance Program, is a key sticking point.
Rep. Garret Graves, one of the top negotiators for House Republicans, stated that the sides are having "a very candid conversation about how we're going to move forward — if we're going to be able to come together, and ultimately get an agreement."
The two sides are also debating revising permits for infrastructure and energy projects as part of an accord and withdrawing unutilized Covid relief money.
Yellen noted 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," adding that if Congress fails to increase the debt limit, "severe hardship" would befall American families and harm the US' position worldwide.
