US may default June 1 without debt ceiling hike; Biden calls McCarthy to meet
US President Joe Biden on Monday summoned the four top congressional leaders to the White House next week after the Treasury warned the government could run short of cash to pay its bills as soon as June.
The US Treasury said that it could run out of money to pay all of the government's bills as soon as June without a debt limit increase, prompting Biden to call for the meeting with leaders including Republican House Speaker Kevin McCarthy on May 9.
Treasury Secretary Janet Yellen said in a letter to Congress that the agency will be unlikely to meet all US government payment obligations "by early June, and potentially as early as June 1" without action by Congress.
Biden called McCarthy in Jerusalem, where he is on a diplomatic trip, as well as House Democratic leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Republican leader Mitch McConnell to set up the meeting.
House Republicans passed a bill to raise the debt limit last week that includes steep spending cuts which the Democratic-controlled Senate and Biden say they will not approve. Failing to act before Treasury's new June 1 date could force the United States into an unprecedented default on some bills.
Biden has steadfastly said he will not negotiate over the debt ceiling increase but will discuss budget cuts after a new limit is passed. Congress has often paired debt-ceiling increases with other budget and spending measures.
The new potential "X-date," which takes into account April tax receipts, is largely unchanged from a previous estimate, issued in January, that the government could run short of cash around June 5. But Yellen also added some wiggle room.
"It is impossible to predict with certainty the exact date when Treasury will be unable to pay the government's bills, and I will continue to update Congress in the coming weeks as more information becomes available," she wrote, urging Congress to act quickly to raise the limit.
After hitting the $31.4 trillion borrowing cap on Jan. 19, Yellen previously told Congress that Treasury would keep up payments on debt, and federal benefits and make other spending by using extraordinary cash management measures. One such step Treasury is taking is suspending the sales of securities that state and local governments use to temporarily hold cash.
In 2011, a similar debt ceiling fight took the country to the brink of default and prompted a downgrade of the country's top-notch credit rating.
Reuters
