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Treasury Secretary Janet Yellen warned lawmakers Monday that the federal government could run short of money to pay its bills as early as June 1 unless the debt ceiling is raised soon.
Yellen acknowledged the date is subject to change and could be weeks later than projected, given that forecasting government cash flows is difficult. But based on April tax receipts and current spending levels, she predicted the government could run short of cash by early June.
“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,” Yellen wrote in a letter to House Speaker Kevin McCarthy, R-Calif.
The warning provides a more urgent timetable for what has been a slow-motion political showdown in Washington.
House Republicans are demanding deep spending cuts and other policy changes in exchange for raising the debt limit. President Biden has insisted he won’t negotiate over the full faith and credit of the federal government.
On Monday, President Biden invited McCarthy to a meeting at the White House on May 9 with Senate Majority Leader Chuck Schumer, D-N.Y., and House Minority Leader Hakeem Jeffries, D-N.Y., along with Senate Minority Leader Mitch McConnell, R-Ky. According to a White House official, Biden plans to use the meeting to stress the urgency of avoiding a default, while discussing a separate process to address government spending.
The government technically reached its debt limit in January, but Yellen said then that she could use emergency measures to buy time and allow the government to keep paying bills temporarily.
Other forecasters have predicted those emergency measures will last through midsummer or beyond. But the first two weeks of June have long been considered a nail-biter, before an expected inflow of quarterly tax payments on June 15.
Yellen urged lawmakers not to take any chances.
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” she wrote.
“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” she added.