The US likely won't make it to June 15 without a default if lawmakers don't reach a deal, Treasury Secretary Janet Yellen says
- The US likely won't make it through June 15 without defaulting on its obligations unless there's a debt ceiling deal, Janet Yellen said.
- The Treasury Secretary reiterated her early June deadline for Congress to raise the debt ceiling.
The government likely won't make it through June 15 without defaulting on its obligations unless lawmakers reach a debt deal, according to US Treasury Secretary Janet Yellen.
In an interview with NBC on Sunday, she reiterated her estimate that Congress has until June 1 to raise the national debt ceiling, despite some commentators calling her previous warning a bluff.
"I indicated in my last letter to Congress that we expect to be unable to pay all of our bills in early June and possibly as soon as June 1. And I will continue to update Congress, but I certainly haven't changed my assessment. So I think that that's a hard deadline," Yellen said.
The Treasury's cash balance fell to $57.3 billion as of Thursday, with $92 billion of "extraordinary measures" remaining as of Wednesday to help pay the government's bills.
The cash balance fluctuates daily depending on tax receipts and government spending, and a June 15 tax filing deadline could bring revenue inflows. But Yellen was pessimistic the Treasury could hold out that long.
"It's hard to be absolutely certain about this, but my assessment is that the odds of reaching June 15th, while being able to pay all of our bills, is quite low," she said.
Yellen also rebuffed notions that the US could avoid a default without Congress lifting the debt ceiling, like President Joe Biden invoking the 14th Amendment, which says the validity of US debt "shall not be questioned."
"My devout hope is that Congress will raise the debt ceiling," she added. "There will be no acceptable outcomes if the debt ceiling isn't raised, regardless of what decisions we take."
Policymakers are still sparring over what conditions tor raise the national debt limit, with Biden and House Speaker Kevin McCarthy expected to continue talks on Monday.
Previously, McCarthy has said he would reject a short-term increase of the debt ceiling without negotiating government spending cuts, having passed a bill that would slash around $4.5 trillion in spending.
Experts have warned that failing to raise the debt ceiling in time could lead to an economic catastrophe, as the reliability of US debt is foundational to global financial markets. A debt default could trigger an economic "storm" that could rival the 2008 recession, Yellen previously warned.