The Treasury Department warned lawmakers on Monday that without congressional action to lift or suspend the debt limit, the country will be unable to pay its obligations as soon as June 1.
In a letter to House Speaker Kevin McCarthy (R-CA), Treasury Secretary Janet Yellen urged Congress to resolve the current brinkmanship over the federal borrowing limit, warning that waiting until the last minute could have adverse impacts on the economy and the nation’s credit rating.
Yellen had previously warned Congress in January that the United States had reached its $31.4 trillion debt limit and that the Treasury Department would take “extraordinary measures” to buy time for Congress to act. Since then, the agency has collected the tax filings of millions of Americans, allowing the Treasury to better predict when it will be unable to pay its bills.
“After reviewing recent federal tax receipts, our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time,” she said.
While Yellen acknowledged that the date could be “a number of weeks later” than June 1, the time frame will put renewed pressure on Washington to come to an agreement over the debt ceiling. Financial analysts had previously predicted the so-called “X-date” for lawmakers to lift the borrowing limit could be as late as September. [MORE]