“Based on the most recent data available to us, we estimate that in the absence of an agreement, the Treasury Department will not be able to meet the needs of the federal government as of June 5th.” This is what US Treasury Secretary Janet Yellen wrote in a new letter to Congress in which she warned that the government could default on June 5 without raising the country’s $31.4 trillion debt ceiling.
Initially, this “red line” was set on June 1. But negotiations are underway with the Republican majority in Congress to avoid default.
And Yellen indicated in the letter addressed to the Speaker of the Republican House, Kevin McCarthy, that payments worth $ 130 billion will be sent to veterans and people enrolled in Social Security and Medicare programs in the first two days of June. The action, the former Fed governor warned, would leave the Treasury in an “extremely precarious” position in terms of resource availability. Yellen thus called on all parties involved to negotiate “in good faith” to reach a settlement agreement as soon as possible which would make it possible to avoid default.
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