US may breach debt ceiling on June 1, says treasury secretary Yellen

17 May '23

2 min read

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Insights

US treasury department predicts it may be unable to meet all government obligations by early June, possibly as soon as June 1, unless Congress raises or suspends the debt limit.
The estimates could vary based on federal receipts, outlays, and debt.
In response, President Biden held a meeting with congressional leaders, focusing on preventing debt default.

The US Department of Treasury has estimated that it will likely no longer be able to satisfy all the government’s obligations if Congress does not act to raise or suspend the debt limit by early June, and potentially as early as June 1.

“These estimates are based on currently available data, and federal receipts, outlays, and debt could vary from these estimates. The actual date treasury exhausts extraordinary measures could be a number of days or weeks later than these estimates. I will provide an additional update to Congress next week as more information becomes available,” US secretary of the treasury Janet L Yellen said in her second letter to Congress in two weeks.

“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 in the letter.

Following this, President Joe Biden convened with Leader Schumer, Leader McConnell, Speaker McCarthy, and Leader Jeffries in the Oval Office yesterday to engage in an open and constructive dialogue about preventing the US from defaulting on its debt for the first time in the nation's history. The discussion also centred on shaping a budget agreement that can be approved and forwarded to the President's desk, as per a White House briefing.

The President emphasised that while more work remains on a range of difficult issues, he’s optimistic that there is a path to a responsible, bipartisan budget agreement if both sides negotiate in good faith and recognise that neither side will get everything it wants.

ALCHEMPro News Desk (KD)

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