US Treasury Secretary Janet L. Yellen
US Treasury Secretary Janet Yellen says the United States could run out of money to pay its bills by June 1, 2023, if Congress does not raise or suspend the debt limit.
The announcement puts pressure on President Joe Biden and lawmakers to reach a swift agreement to avoid defaulting on the nation’s debt.
The more precise warning over when the United States could hit the so-called X-date dramatically reduces the projected amount of time lawmakers have to reach a deal before the government runs out of money to pay all of its bills on time.
The new timeline could accelerate negotiations between the House, Senate and Mr Biden over government spending.
The House Republicans have refused to raise the limit without deep spending cuts attached.
In response to Ms Yellen’s new timeline, President Biden, yesterday called the top four leaders in Congress to ask for a meeting on May 9 to discuss fiscal issues. The president reached out to Speaker Kevin McCarthy and Representative Hakeem Jeffries of New York, the minority leader, along with Senator Chuck Schumer of New York, the majority leader, and Senator Mitch McConnell of Kentucky, the minority leader.
Economists have warned that failure to raise the debt limit, which caps the total amount of money the US can borrow, threatens to rock financial markets and throw the global economy into a financial crisis.
because the country runs a budget deficit as it spends more money than it takes, it must borrow huge sums of money to pay its bills. In addition to paying Social Security benefits, along with salaries for the military and government workers, the US is also required to make interest and other payments to the bondholders who own its debt.
The Treasury Department had previously projected that it could run out of cash sometime in early June, but the new estimate raises the alarming prospect that the US could be unable to make some payments, including to bondholders, in a matter of weeks.
Writing by Biodun Dare; Editing by Oluwaseyi Ajibade and Tony Okerafor