The US Treasury warned of another risk of default in June
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The US Treasury warned that without raising the debt ceiling, the government could run out of funds and default on June 1.
This was stated by the Minister of Finance Janet Yellen in a letter to the leaders of the Congress, reports Financial Times.
“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 until early June, and potentially as early as June 1, unless Congress raises or suspends the debt ceiling by then.” Yellen said.
She noted that the Ministry of Finance’s assessment is based on the latest data on tax revenues, but “it is impossible to predict with certainty the exact date when the Ministry of Finance will not be able to pay the government’s bills.”
The debate over raising the debt ceiling, or federal borrowing limit, has become a perennial issue in Washington. But the standoff between the Biden administration and Republicans has raised fears that the government is actually headed for a default.
Following the news of Yellen’s letter, the White House confirmed that US President Joe Biden called Republican House Speaker Kevin McCarthy to invite him to a meeting at the White House on May 9 with congressional leaders.
The invitation marks a change in strategy for the White House, which has been demanding that Republicans raise the national debt ceiling and previously insisted that the issue was not up for discussion.
But now Biden is forced to sit down at the negotiating table after Republicans in the House of Representatives passed a bill last week that raises the national debt ceiling and postpones the risk of default until at least next year.
The bill, which also includes a long list of GOP priorities and a plan to cut spending, will not pass the Democratic-controlled Senate. But business leaders and members of Biden’s own party urged him to use the bill as a starting point for negotiations with the other side.
The bill, which also includes a long list of GOP priorities and a plan to cut spending, will not pass the Democratic-controlled Senate. But business leaders and members of Biden’s own party urged him to use the bill as a starting point for negotiations with the other side.
It remained unclear whether Democratic leaders were ready to negotiate on raising the borrowing limit. A spokesman for Senate Democratic Majority Leader Chuck Schumer said the May 9 meeting would be “discussing the adoption of a new default prevention bill.”
Yellen also warned that even the threat of a default could shake markets and send shock waves throughout the US economy.
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