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Yellen reiterates that the US could run out of cash on June 1

Treasury Secretary Janet L. Yellen reiterated Monday that the United States could run out of money to pay its bills by June 1 if Congress does not raise or suspend the debt limitincreasing the pressure on President Biden and congressional leaders as they race to reach a deal to avoid a default.

The screening comes a day before Biden is set to meet with President Kevin McCarthy and other top lawmakers at the White House after a weekend of staff-level negotiations. Treasury Department previously warned that the so-called X-date could come as soon as June 1, at which point the federal government could face the possibility of defaulting on its debt.

In a letter to lawmakers, Ms Yellen warned that the actual date the federal government could run out of cash “could be several days or weeks after these estimates.” She urged Congress to act quickly to prevent a default.

“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious damage to business and consumer confidence, increase borrowing costs in the short term. for taxpayers and negatively affect the credit rating of the United States. United,” said Ms. Yellen.

The Treasury Department has been using accounting maneuvers known as extraordinary measures continue paying the country’s bills without exceeding the debt ceiling of $31.4 trillion, which was officially reached january 19.

Ms. Yellen did not outline any additional steps she plans to take to conserve cash. Budget experts have projected that if the government can find enough resources to pay its bills until mid-June, then an influx of quarterly tax bills could provide additional breathing space until later in the summer.

Ms Yellen’s letter is the latest warning about the government’s precarious financial state. On Friday, the Congressional Budget Office said there was a “significant risk” that the federal government could run out of cash sometime in the first two weeks of June, by which time the United States would not be able to pay all its bills on time in a matter of weeks.

The nonpartisan budget office predicted that a default would lead to “distress in credit markets, disruptions in economic activity and rapid increases in Treasury interest rates.”

Whether the two parties can reach an agreement in time to avoid a default remains an open question. Biden expressed optimism on Sunday that a deal could be reached, but on Monday McCarthy said the two sides were still very far.

The time is finishing. Biden is expected to leave for Japan on Wednesday to attend the Group of 7 leaders’ summit and House lawmakers are expected to be up before Memorial Day weekend.

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