X marks the spot: Yellen tells Congress US could run out of money to pay all its bills by June 5
The U.S. Treasury Secretary has said that the U.S. could default on its debt if Congress does not raise the debt ceiling.
FATIMA HUSSEIN
,
Associated Press
May 26, 2023
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FILE – Treasury Secretary Janet Yellen talks with reporters at the Virginia Innovation Partnership Corporation incubator on the Center for Innovative Technology Campus in Herndon (Va.), Oct. 21, 2022. Despite all the worry about when the government may run out of money to pay bills, no one can tell for sure, not even the U.S. treasury secretary, when a default could occur.
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Kevin McCarthy, R.-Calif. Speaker of the House, speaks to reporters as he enters the Capitol, Washington, on Friday, May 26 2023. McCarthy claims that mediators have "made progress" in negotiating a deal to increase the debt ceiling and reduce federal spending with the White House. They are racing for an agreement this weekend.
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WASHINGTON, D.C. (AP) -- Treasury secretary Janet Yellen warned Congress that if Congress does not raise the federal debt limit in time, the U.S. may default on its obligations on June 5, four days later than originally estimated.
Yellen's note comes at a time when Congress is on a long Memorial Day Weekend, and tensions are building over whether a deal will be reached between the White House in Congress and Republicans.
The 'X date' is the date when the government has exhausted all the 'extraordinary' measures it has taken since January to stretch the existing funds.
Yellen stated in her letter that for the first time in 2015, the agency had used one of these measures to bring the U.S. to this financial position: a swap between the Civil Service Retirement and Disability Fund and Federal Financing Bank of approximately $2 billion in Treasury Securities.
In her letter, she stated that 'the extremely low level remaining resources requires me to exhaust all extraordinary measures available to avoid not being able to meet all the commitments of the Government'.
She said, 'We've already seen Treasury borrowing costs rise substantially for securities that mature in early June.
She said that if Congress failed to raise the debt ceiling, it would be a severe hardship for American families. It would also harm our position as a global leader and make us question our ability to protect our national security.
Her latest estimate is consistent with previous estimates that the U.S. would exhaust all extraordinary measures by early June or as early as June 1. However, the new deadline gives lawmakers and the White House additional time to reach a deal.
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FATIMA HUSSEIN