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.
