WASHINGTON ― Treasury Secretary Janet Yellen announced Friday that the U.S. will run out of money to meet its obligations on June 5, giving President Joe Biden and Republican lawmakers more time to reach an agreement on a budget deal that lifts the debt ceiling.
“Based on the most recent available data, we now estimate that Treasury will have insufficient resources to satisfy the government’s obligations if Congress has not raised or suspended the debt limit by June 5,” Yellen wrote in a letter addressed to House Speaker Kevin McCarthy (R-Calif.).
Yellen previously warned that Treasury would run out of money as early as June 1, putting the Biden administration and McCarthy’s negotiators under extreme pressure to finish hammering out a deal that includes spending cuts sought by GOP lawmakers.
The negotiations have made progress, but lawmakers are still hung up over several issues, including spending levels for the coming years and additional work requirements for some federal safety net programs.
“Democrats right now are willing to default on the debt so that they can continue making welfare payments for people that are refusing to work,” Rep. Garret Graves (R-La.) claimed on Friday.
Asked if Republicans would back off of that demand, Graves replied, “Hell no.”
On Thursday night, The New York Times reported the White House was considering clawing back $10 billion of an $80 billion boost in IRS funding won last year and instead using that money to ease non-defense spending cuts sought by Republicans.
In her letter on Friday, Yellen warned that waiting until the last minute to raise the debt ceiling can cause “serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States.”
On Thursday, the credit ratings agency Fitch placed U.S. credit on rating watch negative, firing a shot across the bow of lawmakers as they struggle to reach a deal.