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Debt ceiling deadline is now June 5, Janet Yellen says

Posted at 3:02 PM, May 26, 2023
and last updated 2023-05-26 17:02:09-04

Treasury Secretary Janet Yellen on Friday estimated the new date when the country will reach its debt limit is June 5.

"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," she wrote in a letter to House Speaker Kevin McCarthy.

Her latest guidance comes after warnings earlier this month that the U.S. government could default on its debt obligations as early as June 1 if Congress did not act. But the exact timing of the so-called X-date has a degree of uncertainty as the Treasury Department tracks money coming into and leaving its coffers.

"We will make more than $130 billion of scheduled payments in the first two days of June, including payments to veterans and Social Security and Medicare recipients. These payments will leave Treasury with an extremely low level of resources," Yellen wrote.

She noted, the Treasury Department is scheduled to make an estimated $92 billion in payments and transfers the week of June 5 and said the government would not have adequate resources to satisfy all of its obligations.

The department has been using so-called extraordinary measures to help the government pay the bills since January – at which time Yellen urged lawmakers to act without delay. On Thursday, the treasury took another measure not used since 2015, swapping about $2 billion in Treasury securities between the Civil Service Retirement and Disability Fund and the Federal Financing Bank in an effort to help avoid default.

Yellen warned that waiting until the last minute to reach a deal has already caused borrowing costs to go up for securities maturing in early June.