Treasury Secretary Janet Yellen wrote in a new letter to Congress the government will not be able to pay all of its bills beginning June 5, giving an updated and precise deadline for lawmakers to raise the debt ceiling.
“Based on the most recent available data, we now estimate that Treasury will have insufficient resources to satisfy the government’s obligations if Congress has not raised or suspended the debt limit by June 5,” Yellen wrote in the letter.
The new date gives provides some breathing room for White House and Republican negotiators who are working on a deal to increase the debt limit. Yellen previously warned the U.S. would face a default without an increase in early June, and as early as June 1.
After weeks of talks, an agreement between White House and Republican negotiators is narrowing, but there are several sticking points, including government spending levels and work requirements for social safety net programs.
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The new deadline also comes as many members of Congress head home for Memorial Day Weekend. Before traveling to Camp David Friday evening, President Joe Biden said he was "very optimistic" about the prospects for a deal.
Yellen in her letter noted the Treasury Department will be able to make scheduled payments of more than $130 billion in the first two days of June, which include payments to veterans and Social Security and Medicare recipients.
But she said those payments will leave the department “with an extremely low level of resources” and additional payments, such as those to Social Security and Medicare, could leave the agency with “inadequate to satisfy all of these obligations.”
Yellen warned Congress that if a deal is not passed soon, it could cause economic hardship to Americans, as well as harm the U.S. on the global stage.
“I continue to urge Congress to protect the full faith and credit of the United States by acting as soon as possible,” she wrote.
Republicans react: Rep. Patrick McHenry (R-N.C.), one of the House GOP's negotiators, said the firm deadline "puts additional pressure" on the talks.
“The deal is within reach," McHenry said. "It just has to be agreed to, and we’re waiting for the White House to understand the current set of terms we’re dealing with.”
"We have to come to some really tough terms in these closing hours,” he added.
Some House Republicans had begun questioning the validity of the June 1 date earlier this week, citing a perceived lack of urgency from the White House in negotiations.
Shortly after Yellen’s latest letter was released, some members of the House Freedom Caucus seized on the new projection, with Rep. Andy Biggs (R-Ariz.) accusing the Treasury chief of “manipulation tactics.”
“Republicans won’t be intimidated,” he tweeted.
Rep. Bob Good (R-Va.) called on Yellen to “show her work” while Rep. Eric Burlison (R-Mo.) urged fellow Republicans to “Hold. The. Line,” a call for members to support no less than the legislation they passed last month without any Democratic support.
White House reacts: Lael Brainard, the Director of the National Economic Council, said in response to Yellen's projection: "Negotiators have made progress toward a reasonable, bipartisan budget agreement in recent days, and the Secretary’s letter underscores the urgent need for Congress to act swiftly to prevent default.”
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