Treasury Secretary Janet L. Yellen reiterated on Monday that the United States could run out of money to pay its bills by June 1 if Congress does not raise or suspend the debt limit, adding to the pressure on President Biden and congressional leaders as they race to reach an agreement to avert a default.
The projection comes a day before Mr. Biden is scheduled to meet with Speaker Kevin McCarthy and other top lawmakers at the White House after a weekend of staff-level negotiations. The Treasury Department previously warned that the so-called X-date could come as soon as June 1, at which point the federal government could face the possibility that it would default on its debt.
In a letter to lawmakers, Ms. Yellen cautioned that the actual date that the federal government could run out of cash “could be a number of days or weeks later than these estimates.” She urged Congress to act quickly to prevent a default.
“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,” Ms. Yellen said.
The Treasury Department has been using accounting maneuvers known as extraordinary measures to keep paying the country’s bills without breaching that $31.4 trillion debt ceiling, which was officially reached on Jan. 19.
Ms. Yellen did not lay out any additional measures that she is planning to take to conserve cash. Budget experts have projected that if the government can find sufficient resources to pay its bills through mid-June, then an influx of quarterly tax receipts could provide additional breathing room until later in the summer.
Ms. Yellen’s letter is the latest warning about the government’s precarious financial state. On Friday, the Congressional Budget Office said that there was a “significant risk” that the federal government could run out of cash sometime in the first two weeks of June, at which point the United States would be unable to pay all of its bills on time within a matter of weeks.
The nonpartisan budget office predicted that a default would lead to “distress in credit markets, disruptions in economic activity and rapid increases in borrowing rates for the Treasury.”
Whether the two sides can reach an agreement in time to prevent a default remains an open question. Mr. Biden expressed optimism on Sunday that a deal could be reached, but on Monday, Mr. McCarthy said the two sides were still far apart.
Time is running short. Mr. Biden is expected to leave for Japan on Wednesday to attend the Group of 7 leaders summit and House lawmakers are expected to adjourn ahead of the Memorial Day weekend.