May 30, 2024

U.S. Treasury Secretary Warns of Impending Default: Country Could Run Out of Cash by June 1st

Janet Yellen
Janet Yellen

Treasury Secretary Janet L. Yellen has issued a warning that the United States could default on its debt by June 1st if Congress fails to raise or suspend the debt limit. The looming deadline has added urgency for lawmakers to find a resolution to the impasse that could have catastrophic consequences for the economy and financial markets.

Ms. Yellen has urged Congress to act as soon as possible to provide certainty that the government will continue to make its payments. The Treasury Department has already begun employing accounting maneuvers to allow the government to continue paying its bills, including payments to bondholders who own government debt. However, the ability to delay a default could be exhausted by early June.

Republicans in the House passed legislation in April that would raise the debt limit in exchange for spending cuts and the rollback of recent Democratic legislation. President Biden has criticized the bill, accusing Republicans of putting America’s economy on the line.

The situation is expected to come to a head in the coming weeks, with Mr. Biden expected to meet with Speaker Kevin McCarthy and other congressional leaders from both parties. While the stakes are high, Mr. Biden has remained firm that raising the debt limit is not negotiable and urged Republicans to do so without strings attached.

With time running out, the fate of the country’s debt limit remains uncertain, and the consequences of a default could have far-reaching and devastating impacts.

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