Yellen warns that the US might default on debt by June 1 in absence of Congressional action.
The US Treasury has issued a warning that the federal government may be short of cash to pay its bills by June 1 if Congress does not increase the debt limit.
It has added urgency to a bitter fiscal fight between Democrats, Republicans and the White House.
In a letter to Congress, US Treasury Secretary Janet Yellen mentioned that the agency will be unable to meet payment obligations “potentially as early as June 1” without rapid action from Congress.
The new potential “X-date” hasn’t changed substantially since Treasury Secretary Yellen reported in January that the government could run short of cash around June 5.
However, Yellen has also added some wiggle room, highlighting that it is “impossible to predict with certainty” the exact date when Treasury will no longer be able to pay the government’s bills and promising to update Congress as more information becomes available.
Following discussions between Republicans and Democrats, the debt ceiling battles are expected to continue for several more years, with benefit programs like Social Security and Medicare projected to grow considerably as the population ages.