US Treasury reinforces June 1 default date without debt ceiling hike

WASHINGTON – The United States Treasury Department said on Monday that it still expects to be able to pay the US government’s bills only until June 1 without a debt limit increase, maintaining pressure on congressional Republicans and the White House to reach a deal.

In her second letter to Congress in two weeks, Treasury Secretary Janet Yellen confirmed that the agency will be unlikely to meet all US government payment obligations by early June,

triggering the first-ever US default

.

The debt ceiling

could become binding by June 1, she said.

The new date reflects further data on revenues and payments received since Dr Yellen’s told Congress on May 1 that the Treasury

will likely run out of cash to pay government bills

in early June, and potentially as early as June 1.

The actual date that the Treasury exhausts its measures could be a number of days or weeks later than these estimates, said Dr Yellen, adding that she will provide an additional update to Congress next week as more information becomes available.

US President Joe Biden on Monday said he will meet House Speaker Kevin McCarthy for debt ceiling talks on Tuesday before travelling to Japan on Wednesday for a Group of Seven leaders summit, a trip that will take about a week.

Mr McCarthy said there has been no progress in marathon talks at the staff level throughout the weekend.

Dr Yellen has repeatedly warned that failure by Congress to raise the US$31.4 trillion (S$41.9 trillion) federal debt limit could spark a “constitutional crisis” and would unleash an “economic and financial catastrophe” for the US and global economies.

The non-partisan Congressional Budget Office last week said that without a debt ceiling hike, the US faces a “significant risk” of defaulting on payment obligations within the first two weeks of June, with payment operations uncertain throughout May. Reuters