Without a rise in the debt ceiling, the US Treasury warned Monday that it might run out of money to pay all its debts by June. To prevent an economic disaster, President Joe Biden assembled the four most powerful congressional leaders.
On May 9, Biden reportedly called Republican House Speaker Kevin McCarthy in Jerusalem to discuss the debt ceiling and government spending.
If Congress does not act, U.S. Treasury Secretary Janet Yellen cautioned lawmakers in a letter that the department may be unable to fulfill all payments “by early June, and potentially as early as June 1” if they do not act.
The latest “X-date,” which incorporates April tax revenues, is consistent with the January projection that the government will run out of money around June 5. Yellen left some room for maneuver.
She warned legislators that the Treasury might run out of “extraordinary measures” “a number of weeks later than these estimates” due to the unpredictability of government revenue and expenditure.
“It is impossible to predict with certainty the exact date when the Treasury will be unable to pay the government’s bills,” she wrote to Congress, pleading for an immediate boost.
Despite the fact that the Treasury reached its borrowing limit of $31.4 trillion on January 19, Yellen told Congress that cash collections and specific cash management methods would sustain debt, government benefits, and other outlays.
In 2011, a debt limit dispute pushed the United States dangerously close to default, damaging its credit rating. According to veterans of the 2011 stalemate, discussions may be more difficult this time.
The Republican-controlled House of Representatives authorized a debt limit increase on April 26 that lowers funding for poor healthcare and other programs. According to the Department of Transportation, these cutbacks would result in the closure of hundreds of air traffic control towers. The proposal would reduce solar tax credits.
The Republican proposal would cut $4.5 trillion from the budget in return for a $1.5 trillion rise in the debt ceiling. After the White House announced President Joe Biden’s veto, it’s unlikely to pass the Democrat-controlled Senate.
The White House wants Congress to raise the debt ceiling without limitations and hopes to discuss the president’s 2024 budget proposal with Republicans.
Benefit programs such as Social Security and Medicare account for the majority of the budget and are predicted to expand as the population ages, making debt limit debates likely to continue.
Biden’s administration is sending cabinet members and key advisors on a media tour to warn about Republican House Speaker Kevin McCarthy’s economic threat.
On April 26’s “Marketplace,” Lael Brainard, National Economic Policy Director, warned that a US default would disrupt financial markets.
Negotiation is beneficial, but finances are continually subject to conflict. She said we cannot allow Congress to use the debt ceiling to entrap an unrelated legislative agenda.
