US Treasury Secretary Yellen: June 1 'hard deadline' to raise the debt ceiling

US Treasury Secretary Yellen: June 1 'hard deadline' to raise the debt ceiling

Yellen's warning came hours after President Joe Biden delivered a grim assessment on the state of negotiations during his remaining hours in Japan.

ANIUpdated: Monday, May 22, 2023, 10:43 AM IST
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US Treasury Secretary Janet Yellen reaffirmed June 1 as the "hard deadline" for the US to raise the debt ceiling or risk defaulting on its obligations, CNN Business reported.

"I indicated in my last letter to Congress that we expect to be unable to pay all of our bills in early June and possibly as soon as June 1. And I will continue to update Congress, but I certainly haven't changed my assessment. So I think that that's a hard deadline," Yellen said on Sunday (local time) during an interview on NBC's "Meet the Press." Yellen's warning came hours after President Joe Biden delivered a grim assessment on the state of negotiations during his remaining hours in Japan.

According to CNN Business, Biden issued a stark warning Sunday, ahead of his high-stakes phone call with House Speaker Kevin McCarthy, that congressional Republicans could use a national default to damage him politically and acknowledged time had run out to use potential unilateral actions to raise the federal borrowing limit, a sharp shift in tone days before the deadline to reach an agreement.

Reflecting that shift tone, the treasury secretary reiterated that there will be some bills that go unpaid, if the debt ceiling isn't raised, CNN Business reported.

Some bills may go unpaid

"There will be hard choices to make if the debt ceiling isn't raised," she said. "And you know, I would simply say since 1789, the United States has a history of paying its bills on time. That's what the world wants to see a continued commitment to do that. It's what underlies US Treasury securities as the safest investment on the planet. And it's not an acceptable situation for us to be unable to pay our bills." Yellen downplayed the impact of tax receipts or spending delaying the X-date past early June, saying the odds are "quite low," the US makes it to June 15 without defaulting if no congressional intervention happens.

On sticking points, Yellen pointed to Republican's insistence on taking revenue off the negotiating table among other areas, CNN Business reported.

"Something that greatly concerns me is that they have even been in favour of removing funding that has been provided to the Internal Revenue Service to crack down on tax fraud," she said.

Yellen agrees to not invoking 14th Amendment

Yellen agreed with the president's assessment that invoking the 14th Amendment, "doesn't seem like something could be appropriately used in these circumstances," given the legal uncertainty and time frame. She downplayed the possibility of some extra unilateral action the president could take, and instead said hard choices will be made should a deal not get made and that some bills will go unpaid.

"My devout hope is that Congress will raise the debt ceiling," she said. "There will be no acceptable outcomes if the debt ceiling isn't raised, regardless of what decisions we make." However, Pennsylvania Republican Republican Brian Fitzpatrick said there may be some leeway past the June 1 deadline, according to CNN Business.

"The June 1st date was probably, according to Secretary Yellen, the earliest possible date," he told CBS News, adding that "we do have enough cash flow" to "pay the interest on our debt." "We're going to start to see the state tax revenues come in the second week of June, so I think we're OK on that," Fitzpatrick said.

Fitzpatrick appeared along with his Problem Solvers caucus co-chair Democratic Rep. Josh Gottheimer of New Jersey. Both Gottheimer and Fitzpatrick said they should still treat June 1 as the deadline even if there is some leeway.

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