Yellen is sounding the alarm about a potential default on June 1 if Biden and Congress fail to pass a debt ceiling bill.
Treasury Secretary Janet Yellen predicted on Monday that the US could run out of cash to pay the bills on June 1.
Yellen wrote that forecast in a letter to House Speaker Kevin McCarthy (R-CA) that, based on current data, the nation will reach its debt ceiling at least as early as June.
“If Congress doesn’t raise or suspend the debt ceiling by then, we won’t be able to continue to meet all of our government obligations until early June and potentially June 1,” he said. – writes.
Yellen warned that “waiting until the last minute to suspend or increase the debt limit could seriously damage business and consumer confidence, increase short-term borrowing costs for taxpayers and negatively impact credit ratings.” Credit of the United States.
Yellen cited past “contradictions,” citing the current conflict between McCarthy and Democratic leaders President Joe Biden and Sen. Chuck Schumer (New York) as evidence that congressional action is needed to avert a crisis. economic.
McCarthy defied expectations last week by successfully rallying House Republicans around a plan to lower the debt ceiling. The House narrowly passed the Limit, Save, Grow Act along partisan lines after tense negotiations at the GOP conference.
The bill raises the debt ceiling instead of making significant spending cuts that would save the government about $4.8 trillion over ten years.
Schumer, however, declared the bill, which he calls the “American Default Act,” dead after reaching the Senate, despite offering no viable alternative to the impending disaster.
Biden has pushed back on debt ceiling talks with McCarthy until Monday. But in a move consistent with Yellen’s letter, the president has called McCarthy, Schumer, Senate Minority Leader Mitch McConnell (R-KY) and House Minority Leader Hakeem Jeffries (D-NY) to meet on the issue this month. , the White House confirmed.
Dragging Biden to the negotiating table is a victory for McCarthy after the president insisted he would not cooperate with House Republicans on the nation’s borrowing power.
Both Biden and Schumer have called for a “clean” increase in the debt ceiling, meaning raising the debt ceiling without the spending cuts Republicans are seeking.
McCarthy has vowed not to pursue that option, however, citing excessive government spending and an inflationary average debt ceiling under Biden as reasons to include conditions on any increase or suspension.
Yellen wrote to the GOP leader: “If Congress fails to raise the debt ceiling, it will cause severe hardship for American families, undermine our position as a global leader and raise questions about our ability to protect our interests. national security.
In a statement late Monday, McCarthy responded to Yellen’s letter and slammed the Biden administration for three months of “inaction.”
“After three months of inaction by the Biden administration, the House has acted and the Senate has a bill to end the threat of default,” McCarthy said. “The Senate and the President should get to work as soon as possible.”
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