US Treasury Secretary Janet L. Yellen has sent a letter to Congressional leaders urging them to act swiftly to raise or suspend the debt limit, warning that the Treasury's ability to finance government operations may be exhausted by early June. In the letter, Yellen revealed that the exact date when the Treasury will be unable to pay the government’s bills is uncertain, but estimates suggest it could be as early as June 1.
Yellen emphasized the importance of Congress providing longer-term certainty for the government's ability to make payments. To manage the risks associated with the debt limit, the Treasury is also suspending the issuance of State and Local Government Series (SLGS) Treasury securities, which count against the debt limit. However, this action has potential negative consequences for state and local governments, as it deprives them of a crucial tool for managing their finances.
Yellen warned that waiting until the last minute to suspend or increase the debt limit could damage business and consumer confidence, increase short-term borrowing costs for taxpayers, and negatively impact the US credit rating. Failure to address the debt limit could result in severe hardship for American families, compromise the country's global leadership position, and raise concerns about national security.
In response to Yellen's letter, President Biden called congressional leaders, including Speaker McCarthy, Leader Jeffries, Leader Schumer, and Leader McConnell, to invite them to a meeting at the White House on May 9. White House Press Secretary Karine Jean-Pierre said in a press briefing that the President is prepared to discuss budget and appropriations processes but reiterated that the debt limit extension is not negotiable, as the US is not a "deadbeat nation."