The US Treasury issued a warning on Monday, adding urgency to a contentious fiscal standoff between congressional Republicans and Democrats and the White House, that the federal government might not have enough money to pay all of its bills as early as June 1.
In a letter to Congress, US Treasury Secretary Janet Yellen warned that without congressional intervention, the agency would be unlikely to fulfill all of the US government’s payment obligations “by early June, and potentially as early as June 1.”
The new potential “X-date,” which accounts for tax receipts from April, is largely consistent with an earlier prediction made in January that the government might run out of money around June 5. But Yellen also provided some leeway.
The Republican-led House of Representatives passed a bill on April 26 that would raise the debt ceiling in exchange for deep cuts to healthcare for the poor and other budget cuts that the Department of Transportation says would shut hundreds of air traffic control towers. The bill also would slash tax incentives for solar and other climate-friendly energy sources.
The Republican bill would implement $4.5 trillion in spending cuts – or about 22% – in exchange for a $1.5 trillion increase in the US debt limit. It has no chance of passing the Democrat-controlled Senate and the White House has said President Joe Biden would veto the legislation.
The White House has asked Congress to raise the debt limit without conditions; administration officials are already making plans to negotiate with Republicans over the president’s 2024 budget plan.