The U.S. government may not be able to pay all of its bills on time if the debt limit is not raised or suspended by June 5, Treasury Secretary Janet L. Yellen said in a letter Friday afternoon.
Yellen updated the Treasury’s estimate of when it will run out of money and borrowing room to pay for the letter to Speaker Kevin McCarthy. He has previously warned lawmakers that the department’s funds could be too low by June 1, so the update offers a little more breathing room as McCarthy and the White House work to negotiate a cap increase. in debt.
Yellen said the Treasury will make more than $130 billion in scheduled payments — including Social Security, Medicare and veterans benefits — in the first two days of June, leaving the department with “a surplus low level of resources.” The Treasury projects that it lacks the resources to satisfy all of its obligations in the week of June 5, which includes an estimated $92 billion in payments and transfers.
The Treasury also deployed another emergency tool on Thursday that it has not used since 2015 because of its limited scope, Yellen said, adding that she must use all “extraordinary measures” available. due to the low level of Treasury resources as the debt limit deadline approaches. .
Yellen also warned Congress that last-minute action on the debt limit could damage business and consumer confidence, raise borrowing costs in the short term and lead to a downgrade in the United States’ credit rating. while the failure to increase the debt limit in time will stimulate the wider. result.