Now the Treasury Secretary says the US could run out of money by JUNE 5th
Treasury Secretary Janet Yellen now says the federal government could run out of money to pay its bills by June 5, pushing back the date of a possible default by four days.
“Based on the most recent data available, we now believe that unless Congress raises or suspends the debt limit by June 5, the Treasury Department will not have sufficient resources to meet government commitments,” Yellen wrote on Friday afternoon in a letter to Congress.
With White House negotiators and House Republicans far apart on a deal, it buys them a few extra days to work out their differences.
Yellen’s previous warnings to Congress that the US could run out of funds “as early as June 1st” – now she definitely says she expects Treasury funds to “run dry” by June 5th.
Yellen explained how she came to this conclusion:
“We will make more than $130 billion in planned payments in the first two days of June, including payments to veterans and Social Security and Medicare beneficiaries.” Those payments will leave the Treasury Department under extremely tight resources .”
“For the week of June 5, the Treasury Department is scheduled to make an additional $92 billion in payments and transfers, including a regularly scheduled quarterly adjustment of an approximately $36 billion investment in the Medicare and Social Security funds.” Therefore, our planned resources would not be sufficient to meet all of these commitments.”
Treasury Secretary Janet Yellen now says the federal government could run out of money to pay its bills by June 5, pushing back the date of a possible default by four days
The minister said the Treasury Department had taken an “additional exceptional measure” that it had used in earlier stages of debt containment: swapping $2 billion worth of government bonds between the Public Sector Retirement and Disability Fund and the United States Federal Financing Bank.
She added that Treasury borrowing costs for securities maturing in June had already risen “substantially” and urged Congress to pass an increase “as soon as possible.”
Right-wing members had cast doubt on Yellen’s original pre-June 1 warning – some suggested summoning the secretary to explain her pre-warning.
“5. June? Yellen said it was June 1 earlier this WEEK. “Republicans are undeterred by their manipulation tactics,” Rep. Andy Biggs, R-Ariz., tweeted after the news.
“I don’t think the first of the month is the actual deadline,” Florida Rep. Matt Gaetz told reporters ahead of Yellen’s latest letter. “Everyone knows that’s wrong,” said Rep. Ralph Norman, RS.C.
“Yellen couldn’t think of inflation like an oncoming train.” But she walks out of some back room in the White House with a Ouija board … and tells us the 1st of the month is the number,” said Rep. Chip Roy, R-Texas.
President Biden is leaving the city after Camp David and Delaware over the weekend with no agreement in sight. Speaker Kevin McCarthy and his top negotiators — Rep. Garret Graves, of Louisiana, and Patrick McHenry, of North Carolina — huddled together again in the Capitol on Friday — though they said the two sides were still far apart.
“I don’t know if it’s going to be another day, two, three days” before a deal is struck, McHenry told reporters on Friday.
“Each time there is further progress, the remaining problems become more difficult and challenging.”
“Eventually this thing may come together — or go the other way.”
No meetings between House Republican Party negotiators and White House Representatives Shalanda Young and Steve Ricchetti were scheduled for Friday.
Graves confirmed that he and Young exchanged a few words at the White House during a ceremony for the Louisiana State University women’s basketball team.
“We’ve spent some time talking about the nature of the parameters and where we are right now,” he said, adding that they were no closer to an agreement.
In 2011, the country faced a similar crisis under former President Barack Obama, who also faced a Republican House of Representatives opposed to raising the ceiling.
Although the ceiling was raised, the threat of default was enough to roil US financial markets and the country’s credit rating was subsequently downgraded to AA+ from AAA.
Bloomberg reports the two sides are nearing an agreement that would raise the debt limit for two years and cap spending for the same period — and the agreement would claw back $10 billion of the $80 billion increase in IRS funding , which the Democrats passed last Congress.
But a source familiar with the talks told DailyMail.com the two sides had not agreed on a maximum amount and had not agreed on whether to extend the borrowing by a year or two. The Republicans only want one year, the Democrats want to push through the extension until the next election.
Both sides are also busy with defense spending on Friday. Republicans wanted a significant increase in the defense budget despite wanting spending cuts overall, while Democrats called for spending cuts. The two sides could agree on a small increase — in line with President Biden’s $886.3 billion budget request.