Treasury Secretary Janet Yellen told Congress on Friday that the U.S. could default on its debt obligations by June 5 – four days later than previously estimated – if lawmakers do not act in time to raise the federal debt ceiling.
Yellen’s letter comes as Congress breaks for a long Memorial Day weekend, and tensions build over whether a deal between the White House and Republicans in Congress will be struck in time.
The so-called “X-date” arrives when the government no longer has enough of a financial cushion to pay all its bills, having exhausted the “extraordinary measures” it has been employing since January to stretch existing funds.
Yellen said in her letter that the agency used one such measure for the first time since 2015 to get the U.S. financial position to this point: a swap of roughly $2 billion in Treasury securities between the Civil Service Retirement and Disability Fund and the Federal Financing Bank.
“The extremely low level of remaining resources demands that I exhaust all available extraordinary measures to avoid being unable to meet all of the government’s commitments,” she said in her letter.
“We have already seen Treasury’s borrowing costs increase substantially for securities maturing in early June,” she said.
“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,” she said.
The latest projection is in line with her previous estimations that the U.S. could exhaust all extraordinary measures in early June and as soon as June 1, but the latest deadline affords lawmakers and the White House more time to strike a deal.