The U.S. Treasury Secretary Janet Yellen on Friday issued another warning saying that the U.S. would default if Congress does not reconsider raising the $31.4 trillion debt ceiling by June 5.
What Happened: The treasury chief had previously said the federal government could potentially default as early as June 1 but is now characterizing June 5 as the precise deadline when Washington would run out of money to pay its bills.
"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 to leaders.
Yellen, in a letter to Congress, informed that her department is set to disburse over $130 billion in scheduled payments in the initial two days of June to veterans, Social Security recipients and Medicare beneficiaries.
“During the week of June 5, Treasury is scheduled to make an estimated $92 billion of payments and transfers,” she said, adding, “Therefore, our projected resources would be inadequate to satisfy all of these obligations.”
Why It Matters: The extension in deadline offers additional time for White House and congressional negotiators to reach a final agreement on increasing the federal government’s borrowing capacity.
Meanwhile, President Joe Biden said a deal to resolve the government’s debt ceiling crisis seemed "very close" late Friday. "It's very close, and I'm optimistic," Biden said as he left for the Memorial Day weekend at Camp David, reported The Washington Post.
Read Also: Peter Schiff Says Raising Debt Ceiling Won't Preserve America's Prosperity But This Will
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