Treasury Secretary Janet Yellen speaks at the Indonesian Infrastructure and Finance Compact signing ceremony at the International Monetary Fund (IMF) headquarters in Washington, DC, April 13, 2023.
Stephanie Reynolds | AFP | Getty Images
WASHINGTON — Treasury Secretary Janet Yellen on Monday warned The U.S. could run out of measures to pay its debt by June 1, sooner than the government and Wall Street expected.
In a letter to House Speaker Kevin McCarthy, President Yellen raises estimates for when new data on tax revenues will prevent the Treasury Department from “continuing to meet all governmental obligations” to as early as June 1. He said he was forced to. , if Congress does not raise or suspend the debt ceiling by then.
This date is earlier than Wall Street economists expected. Goldman Sachs’ latest estimates this week had a deadline set for sometime in late July, but bank economists conceded that weaker-than-expected tax revenues could push that deadline forward. rice field.
On Monday, President Joe Biden announced that the “Big Four” congressional leaders — Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell, McCarthy, and House Democratic Leader Hakeem Jeffries — A White House official told NBC after making a phone call and inviting him to a May 9 meeting at the White House.
Congressional Budget Office fix the quote for the so-called x-date on Monday.
“Tax revenues through April were lower than the Congressional Budget Office expected in February, which puts the Treasury at a significantly higher risk of running out of funds in early June. I have written CBO Director Phil Swagel.
Technically, there is a month between the date of the letter and the earliest x-date, but according to the Congressional calendar, there is only the 8th of this month on Monday, when both the House and Senate are in session at the same time. .
This could have a significant impact on efforts to strike a direct last-minute deal with a debt ceiling hike that could gain enough support to pass through the Republican-controlled House and Democratic-led Senate. .
McCarthy was in Israel on Monday to address the Knesset, the country’s parliament.
For the past two months, the White House has refused to participate in talks with McCarthy on the debt ceiling, with House Republicans calling for conditional passage to raise the debt ceiling. In exchange for a vote to avoid defaulting on the debt, the Republican House of Representatives demanded drastic cuts in federal spending.
Yellen’s letter, which came less than a week after the Republican Party passed a bill to raise the debt ceiling and cut government funding through the House, was designed to help McCarthy win Republican support. This was after 11 hours of change.
Earlier in the day on Monday, Schumer ripped up House Republican bills, accusing Republicans of “locking the House in an unacceptable and very extreme position and increasing the likelihood of default by pulling us further apart.” bottom.
Goldman Sachs estimates that so far there has been little ripple in the market from the increased risk of default. But analysts wrote that this could change “if the Treasury Department announces a specific deadline for Congress to raise the debt ceiling.”
— CNBC’s John Melloy contributed to this article.