Treasury Secretary Janet Yellen warned Monday that the U.S. may default on its debt by June 1 if Congress doesn’t act to raise the debt ceiling.
“[O]ur 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,” Yellen wrote in a letter addressed to House Speaker Kevin McCarthy, who is currently embroiled in a dispute with President Joe Biden and Senate Democrats on the subject. McCarthy and the House Republican majority have pressed for spending cuts and reforms in exchange for raising the debt ceiling, which Biden and the Democrats have rejected, arguing for a debt increase without conditions, instead.
Yellen’s letter echoes Democratic rhetoric against Republicans, criticizing them for holding the nation’s economy “hostage” at the risk of a debt default. She added that a “last minute” increase in the debt ceiling before June 1 would cause “serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States.”
Sec. Yellen Letter to Speaker McCarthy by Daily Caller News Foundation on Scribd
The letter comes shortly after House Republicans passed the Limit, Save, Grow Act, a bill that raises the debt ceiling by $1.5 trillion in exchange for cuts to spending on Democratic priorities, such as repealing tax credits for green technology under the Inflation Reduction Act (IRA) and the Biden-Harris Student Debt Relief Initiative. While most Republicans had supported the bill, it was only passed narrowly after some representatives opposed the repeal of IRA ethanol subsidies. (RELATED: WILFORD: McCarthy’s Latest Debt Triumph May Not Be Enough)
Senate Majority Leader Chuck Schumer, a Democrat, has called the Limit, Save, Grow Act “dead on arrival” in the Senate.
Yellen’s letter also announced that the Treasury Department would be suspending State and Local Government Series (SLGS) Treasury securities, which are issued by the federal government to help states and municipalities comply with local tax rules but count against the debt limit, according to the letter.
McCarthy, meanwhile, has sought to compel Biden and Democrats to negotiate with him over his proposed spending cuts to resolve the impasse, which has so far been unsuccessful.
“The White House needs to ultimately get into this negotiation. The president’s been in hiding for two months. That’s not acceptable to Americans. They expect the president to sit in a room with Speaker McCarthy and start negotiating, not hiding,” said House Majority Leader Steve Scalise on ABC.
McCarthy’s office has been contacted for a request for comment.
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