Janet Yellen confirms June 1 as a hard deadline for raising the debt ceiling
(CNN) Treasury Secretary Janet Yellen confirmed June 1 as the “hard deadline” for the US to raise the debt ceiling or risk defaulting on its obligations.
“I indicated in my last letter to Congress that we do not expect to be able to pay all of our bills in early June and possibly as soon as June 1. And I will continue to update Congress, but I certainly have not changed my assessment. So I think it’s a tough deadline,” Yellen said during an interview on NBC’s “Meet the Press.”[ads1];
Yellen’s warning came hours after President Joe Biden gave a gloomy assessment of the state of negotiations during his remaining hours in Japan. Biden issued a stark warning Sunday, ahead of his high-stakes phone call with House Speaker Kevin McCarthy, that congressional Republicans could use a national standard to hurt him politically, acknowledging that time had run out to use potential unilateral actions to to raise the federal borrowing limit, a sharp shift in tone days before the deadline to reach an agreement.
As a reflection of that changing tone, the finance minister repeated that there will be some bills that will not be paid, if the debt ceiling is not raised.
“There will be difficult choices to be made if the debt ceiling is not raised,” she said. “And you know, I’ll simply say since 1789, the United States has a history of paying its bills on time. That’s what the world wants to see a continued commitment to do. That’s what underlies U.S. Treasuries like the safest investment on the planet. And it’s not an acceptable situation for us to be unable to pay our bills.”
Yellen downplayed the impact of tax receipts or spending on delaying the X date past early June, saying the odds are “quite low” the US makes it to June 15 without defaulting if no congressional intervention occurs.
At sticking points, Yellen pointed to Republicans’ insistence on taking revenue off the bargaining table, among other areas.
“Something that greatly concerns me is that they have even been in favor of removing funding that has been given to the Internal Revenue Service to crack down on tax fraud,” she said.
Yellen agreed with the president’s assessment that invoking the 14th Amendment “doesn’t seem like anything could be properly applied in these circumstances,” given the legal uncertainty and time frame. She played down the possibility of any additional unilateral action the president could take, saying instead that difficult choices will be made if a deal is not reached and some bill will remain unpaid.
“My devout hope is that Congress will raise the debt ceiling,” she said. “There will not be acceptable outcomes if the debt ceiling is not raised, regardless of what decisions we make.”
However, Republican Rep. Brian Fitzpatrick of Pennsylvania said there may be some leeway after the June 1 deadline.
“The June 1 date was probably, according to Secretary Yellen, the earliest possible date,” he told CBS News, adding that “we have enough cash flow” to “pay the interest on our debt.”
“We’re going to start seeing state tax revenue come in the second week of June, so I think we’re OK with that,” Fitzpatrick said.
Fitzpatrick appeared with his problem-solving co-chair for Democratic Rep. Josh Gottheimer of New Jersey. Both Gottheimer and Fitzpatrick said they should still treat June 1 as the deadline even though there is some leeway.
“Whether or not we have a few more days, the bottom line is that we cannot continue to play chicken with America’s full faith and credit. The risks are too significant, as we all know, both to pay our debts and what it would mean to our reputation in the world, and obviously the Chinese government would love for us to default, Gottheimer said.