U.S. Treasury Secretary Janet Yellen and Ukrainian Prime Minister Denis Shmihal speak to reporters after a bilateral meeting at the U.S. Treasury Department building in Washington, April 13, 2023.
Ken Cedeno | Reuters
WASHINGTON — Treasury Secretary Janet Yellen reaffirmed to Congress on Monday that the United States will not be able to repay its debt before June 1.
“I am writing to note that with additional information now available, we estimate that the Treasury will no longer be able to meet all of the government’s obligations if Congress does not act to raise or suspend the debt ceiling by the beginning of June 1,” she said. wrote.
The guidance came as the White House and congressional leaders prepared to meet on Tuesday to continue negotiations on possible spending cuts in exchange for the House passing a debt ceiling hike. The White House is expected to support any negotiations with the Democratic-majority Senate and the GOP-controlled House.
In recent days, conflicting reports have emerged about whether negotiators are making progress.
President Joe Biden was optimistic about reaching a deal with Republicans late last week and raising or suspending the debt ceiling in time to avoid an economic meltdown, even from a U.S. debt tranche.
“I think there’s a willingness on their part and on our part to reach an agreement, and I think we can do that,” Biden told reporters Sunday in Delaware. He added, “I am optimistic because I am a born optimist.”
But that belief doesn’t match the other side of the table.
“I still think we’re a long way off,” McCarthy told NBC News outside the Capitol on Monday. “It still doesn’t seem to me that they want a deal.”
As he had in earlier letters to Congress, the Treasury secretary underscored the urgency of the situation.
“Waiting until the last minute to suspend or increase the credit limit would seriously harm business and consumer confidence, increase short-term borrowing costs for taxpayers and negatively impact America’s credit rating,” Yellen wrote.
“Indeed, we’ve already seen Treasury borrowing costs increase significantly as bonds mature in early June,” he wrote.
Tuesday’s meeting between Biden, House Speaker Kevin McCarthy, R-Calif., Minority Leader Hakeem Jeffries, D-N.Y., Senate Majority Leader Chuck Schumer, D-N.Y., and Minority Leader Mitch McConnell, R-Ky., began. It was scheduled for Friday, but was postponed until Tuesday to give aides more time to speak.
A new letter arrived in a few days Guidance The Congressional Budget Office said tax revenues and emergency measures after June 15 “will allow the government to continue fiscal operations at least through the end of July.”
“If the debt ceiling remains unchanged, at some point in the first two weeks of June, the government will be unable to pay all of its obligations,” the CBO report said.