Now the Treasury secretary says the US could run out of money by JUNE 5: Confusion as Janet Yellen sets new default ‘x-date’ – giving negotiators longer to find a way to avoid economic meltdown
- As White House and House GOP negotiators remain far apart on a deal, Janet Yellen’s new letter buys them a few extra days to hash out their differences
- Yellen’s previous warnings to Congress said the U.S. ‘could’ run out of funds ‘as soon as’ June 1
- Now she says definitively she believes the Treasury’s funds ‘will’ dry up by June 5
Treasury Sec. Janet Yellen now says the federal government could run out of money to pay its bills by June 5, pushing back the date of potential default by four days.
‘Based on the most recent available data, we now estimate that Treasury will have insufficient resources to satisfy the government’s obligations if Congress has not raised or suspended the debt limit by June 5,’ Yellen wrote in a letter to Congress Friday afternoon.
As White House and House GOP negotiators remain far apart on a deal, this buys them a few extra days to hash out their differences.
Yellen’s previous warnings to Congress said the U.S. ‘could’ run out of funds ‘as soon as’ June 1 – now she says definitively she believes the Treasury’s funds ‘will’ dry up by June 5.
Yellen laid out how she came to the conclusion:
‘We will make more than $130 billion of scheduled payments in the first two days of June, including payments to veterans and Social Security and Medicare recipients. These payments will leave the Treasury with an extremely low level of resources.’
‘During the week of June 5, Treasury is scheduled to make an extra $92 billion of payments and transfers, including a regularly scheduled quarterly adjustment in an investment in the Medicare and Social Security funds of roughly $36 billion. Therefore, our projected resources would be inadequate to satisfy all of these obligations.’
The secretary said the Treasury used an ‘additional extraordinary measure’ that they’ve used in previous debt limit episodes: swapping $2 billion in Treasury securities between the Civil Service Retirement and Disability Fund and the Federal Financing Bank.
She added that Treasury’s borrowing costs have already increased ‘substantially’ for securities maturing in June and urged Congress to pass an increase ‘as soon as possible.’
Right-wing members had sowed doubt that Yellen’s original warning about June 1 – with some suggesting they subpoena the secretary to explain her preduction.
‘June 5? Yellen said it was June 1 earlier this WEEK. Republicans won’t be intimidated by her manipulation tactics,’ Rep. Andy Biggs, R-Ariz., wrote on Twitter after the news.
‘I don’t believe the first of the month is the real deadline,’ Rep. Matt Gaetz, R-Fla., told reporters before Yellen’s newest letter. ‘Everyone knows that is false,’ said Rep. Ralph Norman, R-S.C.
‘Yellen couldn’t see inflation coming like an oncoming train. But she wanders out of some backroom in the White House with a Ouija board … telling us the 1st of the month is the number,’ Rep. Chip Roy, R-Texas, said.
President Biden is heading out of town for the weekend to Camp David and Delaware with no deal in sight. Speaker Kevin McCarthy and his top negotiators – Rep. Garret Graves, La., and Patrick McHenry, N.C., huddled together at the Capitol again on Friday – though they said the two sides were still far apart.
‘I don’t know if it’s going to be a day or two or three’ until a deal, McHenry told reporters on Friday.
‘Each time there’s more progress the issues that remain become more difficult and more challenging.’
‘At some point this thing can come together — or go the other way.’
There were no sit-down meetings scheduled Friday between the House GOP negotiators and the White House’s deputies – Shalanda Young and Steve Ricchetti.
Graves confirmed he and Young briefly exchanged words at the White House for a celebratory event for the Louisiana State University women’s basketball team.
‘We did spend some time talking about kind of the parameters and where we are right now,’ he said, adding that they got no closer to a deal.
In 2011, the country was in a similar crisis under former President Barack Obama who also faced a Republican House opposed to raising the ceiling.
While the ceiling was raised, the threat of default was enough to plunge the U.S. financial markets into turmoil and the country’s rating downgraded from AAA to AA+ as a result.
Bloomberg reports the two sides are closing in on a deal that would increase the debt limit for two years and would cap spending for the same amount of time – and the deal would claw back $10 billion from the $80 billion increase in IRS funding Democrats passed last Congress.
But a source familiar with the talks told DailyMail.com the two sides have not agreed to a top line and have not agreed on whether to extend borrowing for one or two years. Republicans want only one year, Democrats want to push the extension through the next election.
The two sides are also going into Friday hung up on defense spending. Republicans wanted a large increase to the defense budget, even as they want to cut spending overall, while Democrats wanted spending cuts. The two sides could come to agreement with a small increase – in line with President Biden’s $886.3 billion budget request.