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Yellen Says US Might Default As Early As June 1st

In a letter addressed to congressional leaders on Monday, Janet Yellen, the Treasury Secretary of the United States, stated that the deadline for lawmakers to increase the nation’s debt ceiling is June 1st. Yellen also warned that she anticipates the US to become incapable of fulfilling its outstanding obligations by that time, putting the White House and the Republican-led House under greater pressure to come to a final agreement.

At first, the secretary notified lawmakers that it was unlikely that the federal government would exhaust all the extraordinary measures it has been employing to meet its bill payments before early June. However, Yellen mentioned that the deadline is now expected to come earlier than previously predicted, citing recent tax revenues.

The Congressional Budget Office (CBO) cautioned on Monday that the United States faces “considerably higher risk” of the Treasury running out of funds in early June, as April revenues fell short of projections. According to Phillip Swagel, the CBO chief, receipts from all income tax payments processed in April were lower than expected in the most recent budget projections. Additionally, the CBO anticipates the Internal Revenue Service to process tax returns more quickly this year than in the past, following a few years of disruption due to the pandemic.

According to specialists, this is positive information since the schedule allows lawmakers sufficient time to negotiate with President Biden and resolve this issue. Nonetheless, Democratic legislators immediately condemned Republicans following Yellen’s statement. For instance, Senator Jon Tester of Montana asserted that there was no time to squander, and Republicans must promptly resolve the matter.

Conversely, certain Republicans criticized President Biden for his handling of the situation. Texas Senator John Cornyn was among them, and he stated that Yellen’s remarks could provide the US President with additional insight, allowing him to finally engage in discussions with House Speaker and Texas Republican Kevin McCarthy to reach an agreement. Cornyn further suggested that Biden should stop procrastinating and take action.

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