WASHINGTON – The United States has four more days to avoid defaulting on its debt.
Treasury Secretary Janet Yellen on Friday provided an updated timeline for when the government could run out of money, saying her projection is now by June 5 based on the most recent data if the Congress does not raise or suspend the debt ceiling.
Yellen previously said the United States was set to default in early June and “as soon as June 1,” which targeted White House and Republican negotiators to reach a deal on the first of the month.
The sharper projection, outlined in a letter to House Speaker Kevin McCarthy, gives President Joe Biden and McCarthy more time to strike a deal to raise the debt ceiling and avoid a default as they head into Memorial Day weekend.
The two sides are set to strike a new deal to raise the debt ceiling through 2024 and meet Republican demands for spending cuts. But they still have disagreements over expanded work requirements for wellness programs and accelerated permits for oil and gas projects.
Biden, before leaving the White House Friday night for the Camp David presidential retreat, told reporters that “things are looking good” and that he hopes to have “clear evidence tonight before the clock strikes.” 12″ that a deal is finalized.
“It’s very close and I’m optimistic,” Biden said.
Yellen said the Treasury is expected to make more than $130 billion in scheduled payments in the first two days of June, including payments to veterans and Social Security and Medicare recipients, leaving the department with “an extremely low level of resources”.
She said the government balance would be insufficient to meet about $92 billion in payments and transfers, including a planned investment in Social Security and Medicare trust funds of about $36 billion. .
Due to the impasse over the debt ceiling, Yellen said the Treasury has already seen borrowing costs rise significantly for securities maturing in early June.
Credit rating agency Fitch placed the country’s “AAA” rating on Wednesday on negative watch in anticipation of possible inaction by Congress to raise the debt ceiling.
Yellen urged Congress to act, saying a default would “cause serious hardship for American families, harm our position as a global leader, and raise questions about our ability to defend our national security interests.”
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Biden and McCarthy closer to a deal but still not there
White House negotiators and House Republicans have nearly focused on a potential deal to cap annual discretionary spending for the next two years, keeping spending levels steady for many national programs. McCarthy said Republicans want next year’s budget to be lower than last year’s.
In another concession to Republicans, a pending deal would reverse $10 billion of $80 billion in IRS funding approved in Biden’s Inflation Cut Act last year, designed to crack down on wealthy Americans and corporations that evade taxes.
Even with the four extra days, any deal faces a complicated path to passage. Members of Congress are expected to return Tuesday from the Memorial Day long weekend. McCarthy also told Republicans he would follow a rule giving members 72 hours to read a bill before voting.
It’s unclear whether a deal will get Congressional votes to pass, even if it has the support of Biden and McCarthy.
Rep. Patrick McHenry, RN.C., a top Republican negotiator, said the potential June 5 default date “puts additional pressure on us” and “maintains and secures” the urgency to achieve a OK.
“The deal is within reach, it just needs to be accepted, and we’re waiting for the White House to understand the current set of terms that we’re dealing with,” McHenry said.
Yellen warned of the June 5 date in a January letter to McCarthy
This isn’t the first time Yellen has referenced a June 5 date.
The Treasury Secretary sent a letter to McCarthy, R-California, earlier this year warning that a “period of suspension of debt issuance” could last until June 5 before the Treasury exceeds the debt limit.
The Treasury Department announced in January that it would begin taking “extraordinary measures” to prevent the country from defaulting on its debt obligations after the federal government hit its borrowing limit of $31.8 trillion. .
“The length of time that the extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the challenges of forecasting U.S. government payments and receipts months in advance,” Yellen wrote in January.
More: US Treasury Department to Take ‘Extraordinary Measures’ as Government Approaches Debt Ceiling
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This article originally appeared on USA TODAY: Yellen extends impending default deadline by 4 days to June 5