Treasury sets potential new June 5 debt default deadline

Treasury Secretary Janet Yellen released a new letter to Congress on Friday saying the government is unlikely to run out of money to pay all of its bills through June 5 – slightly later than the previous estimate for the government. agency from June 1st. .

“Based on the most recent data available, we now estimate that the Treasury will not have sufficient resources to meet the government’s obligations if Congress does not raise or suspend the debt ceiling by the 5 June,” Yellen wrote.

Republicans have questioned Yellen’s methodology, with some accusing him of “manipulative tactics.”

“June 5? Yellen said it was June 1 earlier this WEEK. Republicans won’t be intimidated by his manipulation tactics,” tweeted Representative Andy Biggs.

“Will the media join our efforts to demand that Janet Yellen show her work? I’ve been asking for it for three months,” said Representative Bob Good.

As he headed to Camp David on Friday evening, President Joe Biden sounded optimistic about the negotiations and hoped more progress would come overnight.

“There is a negotiation going on. Hopefully we will know by tonight if we can get a deal done,” Biden said.

“Things are looking good. I’m very optimistic. Hopefully we’ll have clear evidence tonight before the clock strikes 12 that we have an agreement, but it’s very close. And I’m optimistic.” , he added.

The update gives negotiators much-needed time to strike a deal to raise the debt ceiling and avoid a disastrous default. The so-called “X date” when the United States will run out of funds to pay all of its bills in full and on time has always been fluid, based on daily federal tax receipts and expenditures.

Lawmakers left Washington for the Memorial Day vacation without a deal in hand. House Speaker Kevin McCarthy and Speaker Joe Biden have said in recent days that progress is being made, but there is still no final compromise between the two sides.

ABC News Senior Congressional Correspondent Rachel Scott reported that negotiators are considering a possible deal to raise the debt ceiling and boost defense and veterans spending for two years while recovering COVID-19 funds. not spent.

But the main stumbling blocks in the talks appear to be spending levels and work demands.

Meanwhile, Yellen’s letter arrives when the Treasury Department’s cash reserves are dangerously low.

Treasury Secretary Janet Yellen speaks with reporters during a visit to the Virginia Innovation Partnership Corporation incubator on the Center for Innovative Technology campus in Herndon, Virginia on October 21, 2022.

Cliff Owen/AP, FILE

New Treasury data shows its cash balance shrunk to just $39 billion at the end of the day Thursday. That’s about $60 billion at the end of last week — and $316 billion at the start of the month.

The Treasury also released data showing it has about $67 billion in “extraordinary measures” it can use.

In his letter, Yellen noted that more than $130 billion in payments are expected in the first two days of June, including for veterans and Social Security and Medicare recipients.

“These payments will leave the Treasury with an extremely low level of resources,” she wrote.

ABC News

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