Treasury Secretary Janet Yellen said the US is unlikely to reach mid-June and still be able to pay its bills, underscoring the urgency of the White House reaching a deal with Republicans to raise the debt limit.
(Bloomberg) — Treasury Secretary Janet Yellen said the US is unlikely to reach mid-June and still be able to pay its bills, underscoring the urgency of the White House reaching a deal with Republicans to raise the debt limit.
“Well, there’s always uncertainty about tax receipts and spending,” Yellen said on NBC’s “Meet the Press” on Sunday. “And so it’s hard to be absolutely certain about this, but my assessment is that the odds of reaching June 15 while being able to pay all of our bills is quite low.”
Yellen has previously said the US could lose its ability to pay all its bills as soon as June 1, placing the country at risk of a catastrophic default. While tax payments are expected in mid-June, getting to that date is the problem, she said.
With the debt-ceiling talks stalled, House Speaker Kevin McCarthy said he expects to speak with President Joe Biden on Sunday to avert a debt default. Each side is accusing the other of making unreasonable demands as Republicans seek federal spending cuts as the price for lifting the borrowing cap.
Biden and McCarthy have been at an impasse since January over raising the government’s $31.4 trillion borrowing limit. The Treasury has been deploying special accounting measures since January to stay within the statutory ceiling.
“On June 15, there are tax payments that are made that are substantial,” Yellen told NBC. “But early June, I interpret as before that, and it would be very difficult to get to that date.”
The standoff over the debt ceiling has the potential to put more strain on the US economy, which is already vulnerable to a recession after a series of interest-rate hikes by the Federal Reserve, according to Bloomberg Economics.
Economists have cautioned that US default would risk triggering a market selloff, a surge in borrowing costs and a blow to the global economy that could rival the 2008 crash. A temporary walkout from the debt-limit talks by Republican negotiators sent stocks down on Friday.
Yellen is expected to update Congress this week on how long the US has before it risks running out of cash to pay its bills. She has repeatedly urged a deal that would avoid a default.
The US government’s coffers have been dwindling to the lowest level in almost a year-and-a-half, showing how the window for resolving the partisan standoff over the debt cap is narrowing. The Treasury Department said Friday it had run through all but about $92 billion of its authorized extraordinary measures as of May 17.
(Adds McCarthy-Biden call in fourth paragraph.)
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