Treasury Secretary Janet Yellen wrote to Republican House Speaker Kevin McCarthy that the federal government might hit its spending limit by June 1 if Congress does not lift the debt ceiling. Yellen wrote on Monday that the government will run out of money in early June if Congress doesn’t lift the ceiling. “Given the current projections, it is imperative that Congress act as soon as possible to increase or suspend the debt limit in a way that provides longer-term certainty that the government will continue to make its payments,” the letter states.
The treasury secretary stated that it is “impossible to predict with certainty the exact date when Treasury will be unable to pay the government’s bills” in her letter. Monday’s letter follows US President Joe Biden’s rumored May 9 meeting with Democratic and Republican leaders to address spending and the debt ceiling. A default may lower the US credit rating, raise interest rates, and create a recession, according to experts. Raising US spending caps is normal but has gotten more difficult in recent years. Republicans in Congress are demanding substantial social program cuts to increase the debt ceiling this year. The Biden administration wants the debt ceiling raised without restrictions so that budget negotiators can resolve programming disputes. Democrats advocated for a “clean” debt ceiling rise after Yellen’s letter. The U.S. will default in a month. “Let’s be clear—this isn’t new spending,” Virginia Senator Mark Warner tweeted on Monday. We’re paying past bills. We cannot cause economic disaster in America.” Last week, the Republican-led House of Representatives raised the debt ceiling by $1.5 trillion in exchange for $4.5 trillion in spending cuts for programs like low-income healthcare, renewable energy, and transportation.
Biden has vowed to veto the bill, which is dead on arrival in the Democrat-controlled Senate. McCarthy called on Democrats to “do their job” to pass the package and prevent a default after its House success. “We have never defaulted on our debt or failed to pay our bills,” White House Press Secretary Karine Jean-Pierre said after the vote. As this measure does, President Biden would never make middle class and working people pay for tax cuts for the wealthy. The President has stated this bill would not pass.” Due to reduced tax revenues, the Congressional Budget Office warned Monday that the government might run out of money by early June.
