Treasury confirms U.S. default on June 1 without debt ceiling increase

The Treasury says that the U.S. could go bankrupt as early as June 1 if the debt limit is not raised.

On Monday, the U.S. Treasury Department said again that it thinks the government will only be able to pay its bills until June 1 without a debt limit raise. This means that White House negotiators and congressional Republicans have only ten days to come to an agreement.

In her third letter to Congress in three weeks, Treasury Secretary Janet Yellen said it was “highly likely” that the agency would not be able to meet all of the U.S. government’s payment obligations by early June or even as early as June 1, if Congress doesn’t act to raise the $31.4 trillion debt ceiling, which would cause the first-ever U.S. default. Yellen said that the estimates, which were the same as what she told Congress in her last letter on May 15, were based on the data that was available at the time.

However, government income, spending, and debt could still change. She said she would tell Congress when she had more information.

U.S. President Joe Biden cut short his trip to Asia to negotiate a debt ceiling deal. He will meet with Republican Speaker of the House Kevin McCarthy at 5:30 p.m. after their staffers talked for more than two hours on Monday.

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McCarthy told reporters that the talks were “on the right path” before the meeting.

Yellen has warned Congress many times that if they don’t raise the federal borrowing cap, it will cause an “economic and financial catastrophe” for the U.S. and world economies.

She said that the cost of borrowing money for the Treasury had already gone up, and she asked Congress to do something as soon as possible to avoid the bad things that could happen even before a failure.

“We have learned from past debt limit stalemates that waiting until the last minute to suspend or raise the debt limit can seriously hurt business and consumer confidence, raise short-term borrowing costs for taxpayers, and hurt the credit rating of the United States,” she wrote.


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