Treasury says US will reach debt limit ‘early June 1st’ sooner than expected

Treasury Secretary Janet Yellen said Monday the deadline for extending the debt ceiling or facing the first default in the United States could be June 1, with adjusting the timetable as the way to avert a still-murky self-made crisis on Capitol Hill.

“After reviewing recent federal tax receipts, our best estimate is that we will not be able to continue to meet all of the government’s obligations by early June, and possibly as early as June 1, if Congress does not raise or suspend the debt limit before then,” she wrote. relent in Message to Congress.

But Yellen stressed the uncertainty surrounding the issue and suggested it could slide into “several weeks” after that.

“This estimate is based on currently available data, as federal receipts and disbursements are inherently variable, and the actual date that the Treasury Department exhausts the extraordinary measures may be several weeks later than these estimates,” she wrote.

The new cut-off window gives Congress a narrower timeline for a resolution after Yellen previously said the deadline was June 5. It can be hard to predict. The new date announced on Monday is also expected to be updated as the deadline approaches.

The US hit the legal borrowing limit in January and has since used “extraordinary measures” to pay the bills. Some outside experts — and members of Congress — have predicted a longer period of time before the real deadline.

Yellen’s message comes as the Republican-controlled House of Representatives remains at odds with the Democratic-led Senate and President Joe Biden over the way forward. There are only 31 calendar days before the deadline and the Senate is in session for only 15 of them, while the House of Representatives is scheduled to function for only 12 days.

“Republicans’ failure to agree to cleanly raising the debt ceiling has brought the United States to the brink of economic disaster,” Senator Sheldon Whitehouse, chairman of the Budget Committee, said in a statement. “Today, we learned that we are likely within a month of a self-inflicted economic shock that could dwarf the Great Recession, and Republicans are holding our economy hostage, adding to economic instability.”

House Speaker Kevin McCarthy recently passed a bipartisan bill to extend the debt limit by one year while rolling back parts of Biden’s clean energy agenda and imposing a series of unspecified spending cuts. But Senate Majority Leader Chuck Schumer has blasted the bill as a path to default and has vowed to hold hearings to highlight the “damage” it could do.

The House Republican-led bill calls for cutting discretionary spending to fiscal 2022 levels and imposing a 1% growth cap for the next decade. Many Republicans say they don’t want to cut military spending, which means the proposed cuts would target 15% of the budget that includes funding for education, job training, air travel, rail safety, law enforcement and veterans’ benefits.

Democrats argue that if the GOP bill goes through, it will force cuts to the Department of Veterans Affairs. Republican leaders say the legislation does not require it, though they have not detailed which programs they would halt or cancel.

“It is impossible to predict with certainty the exact date that the Treasury Department will be unable to pay the government’s bills, and I will continue to update Congress in the coming weeks as more information becomes available,” Yellen wrote in the letter Monday. “Given current projections, it is imperative that Congress act as quickly as possible to increase or suspend the debt limit in a manner that provides long-term certainty that the government will continue to make its payments.”