Treasury Secretary Janet Yellen has issued a stark warning that the United States could default on its debt as early as June 1st if Congress does not raise or suspend the federal debt limit. The projection comes ahead of President Biden's scheduled meeting with Speaker Kevin McCarthy and other top lawmakers at the White House on Tuesday.
Secretary Yellen urged Congress to act quickly in order to prevent a default, citing past instances where debt limit impasses have negatively impacted business and consumer confidence. With an existing statutory limit of $31.4 trillion, which was reached in January, the Treasury has been using special accounting maneuvers to stave off a potential default on federal obligations.
As negotiations between White House staff and aides to Congressional leaders continue, there are conflicting reports regarding their progress. Speaker McCarthy stated that ongoing talks were yielding little headway while President Biden expressed optimism about reaching an agreement with Republicans in time to avoid economic fallout from even a potential U.S debt default.
The upcoming meeting between President Joe Biden, House Speaker Kevin McCarthy, and Minority Leader Hakeem Jeffries is expected to focus on finding common ground for addressing the looming deadline concerning the country's financial obligations.
In her letter addressed to McCarthy, Yellen confirmed that it is still likely for the United States to face a financial crisis come early June if Congress fails to take action. She emphasized that without raising or suspending the debt limit by then, Treasury would no longer be able satisfy all government obligations.
The uncertainty surrounding these negotiations puts pressure not only on lawmakers but also on markets and businesses nationwide as they brace for uncharted territory should America run out of borrowing authority without legislative intervention.
Yellen did not provide specific details on what measures her department might undertake should this so-called "X-date" pass without resolution from Congress; however, it remains clear that swift action is required to avert significant economic repercussions.