WASHINGTON — The United States has a few more days than expected before it runs out of money, Treasury Secretary Janet Yellen said in a letter Friday afternoon.
The new deadline to act or risk breaching the debt ceiling is June 5, Yellen said, setting a hard deadline for the first time. She had previously been less specific, saying the breach could occur "potentially as early as June 1."
The Treasury Department hit the statutory borrowing limit in January and has since been using “extraordinary measures” to pay the country's 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 congressional leaders.
The letter comes as the White House and House Republican negotiators still haven't reached a deal. It gives the negotiating teams a modest reprieve as they remain stuck on several issues in the discussions, including work requirements and how to handle federal spending in the coming years.
Treasury secretary sets default date to June 5May 26, 202304:08
The two parties have been sorting through their differences on spending levels. But a major hangup is the Republican demand to impose tougher work requirements for Americans to receive federal benefits like SNAP, the Supplemental Nutrition Assistance Program, two sources familiar with the talks said.
Rep. Garret Graves of Louisiana, who is leading negotiations for House Republicans, said it’s “totally appropriate” for an older group of able-bodied Americans without dependents to be subject to work requirements in order to get federal aid.
“The White House has been very difficult on this issue,” Graves told reporters. “And I’ll tell you, it’s critical.”
Democrats say work requirements already exist for federal programs and argue that stricter policies would create more red tape and throw eligible Americans who don’t complete the paperwork correctly off the rolls, and that work requirements have little impact on unemployment.
Graves said he spoke to White House negotiator Shalanda Young, director of the Office of Management and Budget, on Friday and that the two sides continue to have “a very candid conversation about how we’re going to move forward — if we’re going to be able to come together and ultimately get an agreement.”
The two camps are also discussing pulling back unspent Covid relief funds and overhauling permitting for infrastructure and energy projects as part of an agreement.
The White House is pushing for a two-year debt limit extension in any deal, three sources with knowledge of the talks said, but GOP leaders have not publicly said whether they’ll agree to that.
There is “progress being made,” a source familiar with the talks said earlier Friday. “Don’t think it’s likely today, but we’re close.”Yellen pleaded with Congress to act quickly.
"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," she wrote.
"In fact, we have already seen Treasury’s borrowing costs increase substantially for securities maturing in early June. 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."