Treasury Secretary Janet Yellen Warns of Possible U.S. Default as Debt Limit Negotiations Continue
Date
5/16/2023 7:17:32 AM
(MENAFN) Treasury Secretary Janet Yellen reiterated her concern on Monday about the impending exhaustion of funds to pay the nation's bills, cautioning congressional leaders that the United States could face default as early as June 1. This projected date remains consistent with her previous letter to Congress two weeks ago. Despite recent negotiations between the White House and congressional leaders regarding the debt limit, a resolution has yet to be reached, leaving just a two-week window until the June 1 deadline.
Yellen's letter highlighted that unless Congress acts to raise or suspend the debt limit by early June, the Treasury Department is likely to face difficulties meeting all of the government's obligations. The specific timing of the potential shortfall remains uncertain, as the nation's cash flow could deviate from the department's estimates based on receipts, outlays, and debt. Since reaching the USD31.4 trillion debt ceiling in January, the Treasury Department has employed extraordinary measures to assist in meeting financial obligations.
Yellen acknowledged that the exhaustion of extraordinary measures might occur several days or weeks beyond the current estimates. She assured lawmakers of another update the following week. The anticipation of default is already affecting borrowing costs, as Yellen observed a substantial increase for securities maturing in early June.
President Biden and congressional leaders are scheduled to meet again on Tuesday to discuss the debt limit, a day before the President's planned departure for Japan. Although initial discussions took place at the White House last week, a second meeting on Friday was canceled to allow for ongoing staff-level negotiations.
House Speaker Kevin McCarthy conveyed that little progress has been made thus far, stating that "nothing's moved." He emphasized the need for an agreement to be reached this weekend, expressing concern that the parties involved are currently far from reaching any consensus.
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