Treasury Secretary Janet Yellen sent a letter to House Speaker Kevin McCarthy (R-CA) on Monday, warning that debt ceiling armageddon may be only a month away.
“After reviewing recent federal tax receipts, our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time,” she wrote.
That date, known as the x-date, was previously thought to be a few more months off, but tax receipts have been “weaker than expected” according to analysis from Moody’s Analytics.
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit 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,” Yellen added. “If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests.”
Democrats want to raise or suspend the debt ceiling cleanly; Republicans are demanding political concessions in exchange for their votes. House Republicans passed a bill last week lifting the limit until March 2024 at the latest, but it was stuffed with poison pills for Democrats, including unraveling major pieces of the Inflation Reduction Act.
Republicans have turned what is a procedural vote under Republican presidents into an incredibly high stakes game of chicken under Democratic ones — and a party in the thrall of its furthest right elements is only more likely to shoot the hostage.
Read Yellen’s letter here: