Yellen says U.S. could run out of cash by June

WASHINGTON — Treasury Secretary Janet Yellen reaffirmed to Congress on Monday that america could default on its debt as early as June 1.

“With additional information now available, I’m writing to notice that we still estimate that Treasury will likely not have the ability to satisfy all of the federal government’s obligations if Congress has not acted to lift or suspend the debt limit by early June, and potentially as early as June 1,” she wrote.

The guidance got here because the White House and congressional leaders prepared to satisfy Tuesday to proceed negotiations over potential spending cuts in exchange for House passage of a debt ceiling hike. The Democratic-majority Senate is anticipated to back regardless of the White House negotiates with the GOP-controlled House.

In recent days, conflicting reports have emerged about whether negotiators are making progress.

President Joe Biden sounded optimistic this past weekend about reaching a take care of Republicans to lift or suspend the debt limit in time to avoid economic fallout from even a possible U.S. debt default.

“I actually think there is a desire on their part, in addition to ours, to succeed in an agreement, and I feel we’ll have the ability to do it,” Biden told reporters Sunday in Delaware. He added, “I remain optimistic because I’m a congenital optimist.”

But that optimism wasn’t matched on the opposite side of the table.

“I still think we’re far apart,” McCarthy told NBC News on Monday outside the Capitol. “It doesn’t appear to me yet that they need a deal.”

As she has in prior letters to Congress, the Treasury secretary underscored the urgency of the situation.

“Waiting until the last minute to suspend or increase the debt limit could cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit standing of america,” Yellen wrote.

“The truth is, we’ve already seen Treasury’s borrowing costs increase substantially for securities maturing in early June,” she wrote.

The Tuesday meeting between Biden, House Speaker Kevin McCarthy, R-Calif., Minority Leader Hakeem Jeffries, D-N.Y., Senate Majority Leader Chuck Schumer, D-N.Y., and Minority Leader Mitch McConnell, R-Ky., was initially scheduled for Friday, but postponed until Tuesday to present aides more time to speak.

The brand new letter also got here just days after guidance from the Congressional Budget Office that said tax revenues and emergency measures after June 15 “will probably allow the federal government to proceed financing operations through at the least the top of July.”

“If the debt limit stays unchanged, there is critical risk that sooner or later in the primary two weeks of June, the federal government will not have the ability to pay all of its obligations,” said the CBO report.