The Treasury Department warned on Monday that the federal government could run out of cash to pay all its bills as early as June 1 without raising the debt ceiling, adding to the urgency of a bitter fiscal battle between Congressional Republicans and Democrats and the White House.
Treasury Secretary Janet Yellen said in a letter to Congress that the agency was unlikely to satisfy all government payment obligations “by early June, potentially as early as June 1” without motion by Congress.
The brand new potential ‘date X’, which takes into consideration April’s tax receipts, stays largely unchanged from previous estimates, published in January, that the government could run out of cash around June 5. But Yellen also added some freedom.
“Federal receipts and expenditures are inherently volatile, and the actual date for the Exchequer Exchequer to exhaust emergency funds could also be several weeks later than these estimates,” she wrote to lawmakers.
“The precise date when the Treasury will be unable to pay government bills can’t be predicted with certainty, and I will proceed to tell Congress in the coming weeks as more information becomes available,” she wrote, urging Congress to act quickly to lift the limit.
![Treasury Secretary Janet Yellen](https://nypost.com/wp-content/uploads/sites/2/2023/05/NYPICHPDPICT000009974509.jpg?w=1024)
After hitting the $31.4 trillion debt ceiling on Jan. 19, Treasury Secretary Janet Yellen previously said that the Congressional Treasury will proceed to pay debt, federal advantages and other expenses related to the use of cash receipts and emergency cash management measures.
In 2011, a similar battle over the debt ceiling pushed the country to the brink of insolvency and caused the country’s top credit standing to be downgraded. Negotiations could possibly be even tougher this time around, say veterans of the 2011 duel.
Demands for spending cuts
The Republican House of Representatives passed a bill on April 26 that would raise the debt ceiling in exchange for deep cuts to health take care of the poor and other budget cuts that the Department of Transportation said would shut down a whole bunch of air traffic control towers. The bill would also cut tax incentives for solar and other climate-friendly energy sources.
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The Republican bill would introduce spending cuts of $4.5 trillion – or about 22% – in exchange for a $1.5 trillion increase in the debt ceiling. There isn’t any probability of passage of the Democratic-controlled Senate, and the White House has said that President Joe Biden will veto the bill.
The White House asked Congress to lift the debt limit unconditionally; Administration officials are already planning negotiations with Republicans over the president’s 2024 budget plan.
Debt ceiling struggles in the United States are more likely to proceed for a few years to come back, with profit programs comparable to Social Security and Medicare making up the largest category of the budget and projected to extend dramatically as the population ages.
Biden and his administration are using House Speaker Kevin McCarthy’s proposal to label Republicans as an economic threat, sending cabinet officials and senior advisers on a media tour to discuss the local impact.
National Economic Policy Director Lael Brainard told National Public Radio’s Marketplace on April 26 that it was vitally necessary to avoid default and warned of the destabilizing impact on financial markets.
“It’s good to barter, but budget negotiations occur every 12 months. What we will not see is the use of the debt limit by part of Congress to carry a complete program of unrelated items hostage to this threat of default,” she said.