May 24, 2023 Debt Ceiling Negotiations Update

Treasury Secretary Janet Yellen testifies before the Senate Appropriations Committee to review the Treasury Department's fiscal year 2024 budget on Capitol Hill in Washington, Wednesday, March 22.

Treasury Secretary Janet Yellen said on Wednesday that she will try to be more precise in her next advisory to Congress on when the U.S. could start defaulting on payments.

But she reiterated that it would be difficult to pinpoint a date X because of the inherent uncertainty of revenue and spending obligations, and the country may not be able to pay all of its bills by then, even weeks in advance.

“I will plan to update Congress as quickly as possible and try to be more precise,” Yellen said in virtual comments at the Wall Street Journal CEO Council meeting. “It’s hard to know exactly what day we’re going to run out of resources. [It] It seems almost certain that we won’t make it through early June. ”

in her Letter to Congress on Mondayshe said, “If Congress does not act to raise or suspend the debt ceiling by early June, possibly as early as June 1, then the Treasury Department may well no longer be able to meet all of the government’s obligations.”

She emphasized Wednesday that if negotiations between the White House and House Republicans fail to reach a deal in time, “there will be some hard choices to be made.”

“If Congress does not act to raise the debt ceiling, the Treasury Department and President Biden will face a very difficult choice,” Yellen said. “If we hit the so-called X-date without that happening, then we won’t be able to pay some of our obligations.”

The minister declined to elaborate on what the Treasury could do with regards to payments, but said “in general, order of priority This is not really feasible operationally. ”

“Our payment systems are built to pay our bills, not decide which bills to pay and which not to pay,” she said.

The Treasury Department has sent a memo to federal agencies asking if they can delay certain payments to conserve cash, a person familiar with the matter told CNN.Washington post first report memo.

Some House Republicans, however, don’t think the real deadline is June 1. They think Yellen’s forecast should be more “transparent”.

“It looks like they’re now hedging and opening the door to move that date back,” House Majority Leader Steve Scalise said Tuesday.

Multiple analyzes estimate that date X may have occurred in early June, but not necessarily June 1. The Bipartisan Policy Center predicted Tuesday that the Treasury Department will likely run out of cash to meet all of its obligations sometime from early June to early August, with a “high risk” period between June 2 and June 13.

If the Treasury can keep paying its bills until the middle of next month, the government will likely not default until later in the summer.The agency will get another injection of funds from estimated second-quarter tax payments due on June 15 and from a $145 billion “extraordinary measures” Available at the end of that month.

CNN’s Alayna Treene and Kristin Wilson contributed to this report.

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