Treasury Sec. janet yellen now says the federal government could run out of money to pay its bills by June 5, pushing the potential default date back four days.
‘Based on the most recent data available, we now estimate that the Treasury will have insufficient resources to meet the government’s obligations if Congress has not raised or suspended the debt limit by June 5th,’ Yellen wrote in a letter to Congress on Friday afternoon.
As White House and home republican negotiators stay away on a deal, this gives them a few more days to work out their differences.
Yellen explained how she came to the conclusion:
‘We will make more than $130 billion in scheduled payments in the first two days of June, including payments to veterans and Social Security and Medicare beneficiaries. These payments will leave the Treasury with an extremely low level of resources.’
“During the week of June 5, Treasury is scheduled to make additional payments and transfers of $92 billion, including a regularly scheduled quarterly adjustment on an investment in the Medicare and Social Security funds of approximately $36 billion. Therefore, our projected resources would be inadequate to meet all of these obligations.’
The secretary said the Treasury used an “additional extraordinary measure” that it has used in previous debt limit episodes: swapping $2 billion in Treasury securities between the Civil Service Retirement and Disability Fund and the Federal Bank of Financing.
He added that Treasury borrowing costs have already risen “substantially” for securities due in June and urged Congress to pass an increase “as soon as possible.”