For weeks, Treasury Secretary Janet Yellen declared June 1 as the likely default date for the federal government if the debt ceiling isn’t raised.
However, a lack of agreement between President Joe Biden, advocating for increased borrowing, and Republicans, who emphasize spending cuts, has prompted Yellen to adjust her stance.
On Friday, she revised the deadline, extending it to June 5, raising questions about potential political calculations influencing the decision-making process.
The impending X-date, which is the point at which the government cannot fulfill all its financial obligations, coincides with the necessity for the federal government to make $130 billion in payments that due within the first two days of June.
These due payments include contracts, payroll, and encompass entitlements, Social Security, and Medicare. Once these obligations are met, Yellen wrote in a letter to Congress that the Treasury would be left with “an extremely low level of resources.”
“During the week of June 5, Treasury is scheduled to make an estimated $92 billion of payments and transfers, including a regularly scheduled quarterly adjustment that would result in an investment in the Social Security and Medicare trust funds of roughly $36 billion. Therefore, our projected resources would be inadequate to satisfy all of these obligations,” she wrote.
President Biden and House Republicans have been engaged in negotiations aimed at finding common ground to enable the government to surpass its current borrowing capacity of $31.4 trillion.
House Republicans want $130 billion in cuts to the upcoming budget, as well as a cap on the growth of federal spending at 1% for the next 10 years. They seek requirements that those getting welfare start working at least 20 hours a week. Biden has rejected those demands. He wants only a two-year cap on spending and work requirements only for those who receive actual cash payments of welfare; he would not require food stamp recipients to engage in work.
