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Yellen says US will run out of money by June 5 if debt ceiling not raised

Yellen says US will run out of money by June 5 if debt ceiling not raised

 


Treasury Department Secretary Janet Yellen told lawmakers on Friday that the country will run out of money to pay its bills by June 5 if it doesn’t raise the debt ceiling.

“Based on the most recent data available, we now estimate that the Treasury will not have sufficient resources to meet the government’s obligations if Congress does not raise or suspend the debt ceiling by the 5 June,” Yellen wrote to executives.

The update may offer negotiators who were working with an estimated “X date” of June 1 more leeway to strike a deal to raise the debt ceiling, but it also sets a strict deadline.

At the time of Yellen’s letter, leaders had not announced a deal, after weeks of struggling to overcome key sticking points.

Rep. Garret Graves (R-La.), a key player in the talks, said Friday that proposed changes to work requirements for some federal aid programs remain a “huge sticking point,” and signaled that more work had to be done before the two parties concluded. an agreement on spending limits.

Republicans are pushing for tougher work requirements for programs like Medicaid, the Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families — changing the view of many Democrats as a non-starter.

Graves told reporters that “the White House has been very difficult” on the issue of work requirements, and that the two sides have struggled to come to an agreement on spending for defense and non-defense programs.

Reports emerged on Thursday evening that negotiators had agreed to a two-year increase in the debt ceiling, accompanied by spending caps of the same length, but a source pushed back and said no deal had been reached. .

And while Republican leaders cited “progress” in the talks, they also did not release details.

The White House responded positively to Yellen’s most recent comments, saying they underscore the “urgent need” for movement.

“Letters from the Secretary to Congress since January have estimated that the Treasury would have insufficient resources to meet the government’s obligations in early June and, with the benefit of additional expenditure and revenue data, the Treasury Department is now able to make a more accurate estimate of June 5,” National Economic Council Director Lael Brainard said in a statement.

“Negotiators have made progress toward a reasonable, bipartisan budget deal in recent days, and the secretary’s letter underscores the urgent need for Congress to act quickly to avert default,” she added.

Over the past few weeks, stocks have been swinging back and forth as financial markets appear apprehensive amid the fight against the debt limit. However, Yellen’s letter notably came after shares closed on Friday afternoon.

All three major stock indexes closed Friday with solid gains. The Dow Jones Industrial Average closed with a gain of 328 points, up 1% on the day. The S&P 500 rose 1.3% and the Nasdaq closed Friday with a 2.2% gain.

Yellen previously warned lawmakers risk triggering a federal default “by early June, and potentially as early as June 1,” citing lower-than-expected revenues this fiscal season. Lawmakers viewed June 1 as a deadline, and tensions rose with no deal and a looming default.

Social Security, Medicare and stocks: How a debt ceiling crisis could affect you White House, GOP ‘very close’ to budget and debt limit deal

“Everyone wants the details,” Rep. Patrick McHenry (RN.C.), another top GOP negotiator and ally of Chairman Kevin McCarthy (R-Calif.), said Friday. “But the bigger issue here, a deal that changes the trajectory of our nation’s violence, and that’s what we’re working on.”

“And that’s what we’re working on, and that makes it difficult,” McHenry added.

Emily Brooks, Brett Samuels and Sylvan Lane contributed. Updated at 7:18 p.m.

Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Sources

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2/ https://thehill.com/business/budget/4022902-yellen-says-treasury-will-run-out-of-money-by-june-5-if-debt-ceiling-not-raised/

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