US Treasury Secretary Janet Yellen listens during a signing ceremony for the Indonesia Infrastructure and Finance Compact at the International Monetary Fund (IMF) Headquarters on April 13, 2023 in Washington, DC.
Stephanie Reynolds | AFP | Getty Images
WASHINGTON – Treasury Secretary Janet Yellen on Monday warning That the United States may run out of measures to pay off its debt obligations by June 1, earlier than the government and Wall Street expected.
In a letter to House Speaker Kevin McCarthy, Yellen said new data on tax receipts has forced the department to advance its estimate of when the Treasury Department “will likely be unable to meet all of the government’s obligations.” to June 1, unless Congress extends or suspends the debt ceiling before that.
This date is earlier than expected by Wall Street economists. Goldman Sachs’ latest estimate this week put the deadline at the end of July, although the bank’s economists acknowledged that weaker-than-expected tax receipts could push that timeline forward.
On Monday, President Joe Biden invited the “Big Four” leaders of Congress — Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell, McCarthy and House Democratic Leader Hakeem Jefferies — to a May 9 meeting at the White House to discuss called to. debt ceiling, a White House official told NBC.
congress budget office revised its estimate For the so-called X-Date on Monday.
“Because tax receipts through April have been less than the Congressional Budget Office anticipated in February, we now estimate that there is a significantly higher risk that the Treasury will run out of funds by early June,” wrote CBO director Phil Swagel.
While there is technically a month between the date of the letter and the earliest ex-date, the congressional calendar showed on Monday that there are only eight legislative days this month when both the House and Senate will be in session at the same time.
That could significantly impact any effort to hammer out an individual last-minute deal on a debt-limit increase that won enough support to pass in the Republican-controlled House and Democratic-led Senate. Can do.
McCarthy was in Israel on Monday, where he addressed the country’s parliament, the Knesset.
For the past two months, the White House has refused to participate in negotiations with McCarthy on the debt limit, insisting that House Republicans pass a debt-limit increase without conditions. In exchange for voting to avoid debt default, the House GOP caucus has demanded sweeping cuts to federal spending.
Yellen’s letter comes less than a week after a republican bill The bill to raise the debt ceiling and reduce government funding passed the House, but only after McCarthy made an eleventh-hour change to win over GOP holdouts.
Earlier on Monday, Schumer lambasted the House GOP bill, charging that Republicans “have made a default more likely by closing the House in an unacceptable and very extreme situation, and leaving us more Also pulled apart.”
Goldman Sachs estimates that so far the rising risk of loan defaults have caused few ripples in the markets. But that could change, the analysts wrote, “once Treasury announces a specific deadline for Congress to raise the debt ceiling.”
— CNBC’s John Meloy contributed to this story.