Treasury Secretary Janet Yellen issued another warning Monday about the United States running out of money to pay for its financial obligations if Congress has not raised or suspended the debt limit by early next month, potentially defaulting as soon as June 1.
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” Yellen wrote in a letter to congressional leaders.
“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” she added.
Yellen noted the date that “Treasury exhausts extraordinary measures,” could be days or weeks later than their current estimate, but she still called on lawmakers “to protect the full faith and credit of the United States by acting as soon as possible.”
The Treasury Department in January announced that it would start taking “extraordinary measures” to prevent the country from defaulting on its debt obligations. A default would occur if the U.S. fails to pay bondholders who have lent the government money, a move that could plunge the country into an economic crisis.
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President Joe Biden and congressional Republicans have reached an impasse on debt negotiations in recent weeks. Republicans previously unveiled a debt ceiling plan that included $4.5 trillion in cuts, and proposed cuts could be tied to increasing the debt ceiling.
Biden has said he will not negotiate the debt ceiling, and it should be raised by lawmakers without the parameters.
House Speaker Kevin McCarthy, R-Calif., on Monday said there has been “no progress” on debt ceiling talks so far ahead of a meeting with Biden and other congressional leaders scheduled for Tuesday.
Contributing: Ken Tran and Anna Kaufman, USA TODAY