US Treasury Secretary Janet Yellen has sent a letter to Republican House Speaker Kevin McCarthy warning that the federal government could hit its spending cap by June 1 if Congress does not raise the cap debt.
In a letter released Monday, Yellen said the data points available through early June were the time the administration would be unable to meet requirements if Congress did not raise the cap by then.
“Given current projections, it is essential that Congress act as soon as possible to raise or suspend the debt ceiling in a way that provides long-term security that the administration will continue to make its payments,” he said. . letter while reading.
Although Yellen’s letter suggests that the United States could default as soon as June 1, the Treasury Secretary also noted that “it is impossible to predict with certainty the exact date when the Treasury will not be able to pay the government bills”. .
Monday’s message comes as US President Joe Biden is expected to hold a May 9 meeting with Democratic and Republican leaders to discuss spending and debt limits.
Experts have warned that a default would have a devastating effect on the US economy: it could lead to a decline in the US credit rating, leading to higher interest rates and a possible recession.
Raising the spending cap in the United States is largely a routine procedure, but has become increasingly controversial in recent years. To raise the debt ceiling this year, Republicans in Congress are pushing for deep cuts to social programs in exchange for their support.
The Biden administration has called for raising the debt ceiling without any conditions, noting that discussions on various programs can fragment during annual budget negotiations.
His concerns were echoed by his fellow Democrats after Yellen’s letter, which called for raising the “net” debt ceiling without compromise or lawsuits.
We have about a month left before the United States pays off its debt. Let’s be clear – this is not a new expense,” Virginia Sen. Mark Warner tweeted on Monday. “It’s about paying the bills we’ve already incurred. We cannot unleash economic catastrophe on the American people.”
Last week, the Republican-led House of Representatives passed a bill approving a $1.5 trillion increase in the debt ceiling in exchange for $4.5 trillion in spending cuts for programs like such as health care for low-income people, renewable energy and transport.
The bill was deemed dead en route to the Democratic-controlled US Senate, and Biden said he would veto it. But its passage through the House is seen as a victory for McCarthy, who has since called on Democrats to “do their job” to approve the bill and avoid default.
“Never in our history have we defaulted on a debt or on our bills,” White House spokeswoman Karen Jean-Pierre said in a statement after the vote.
President Biden would never force the middle class and working families to shoulder the burden of tax cuts for the wealthy like this bill does. The president has made it clear that this bill has no chance of becoming law.
On Monday, the Congressional Budget Office also said it saw an increased risk that the government would run out of cash in early June due to lower-than-expected tax revenues.
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