Treasury Secretary Janet Yellen sent a renewed warning to House Speaker Kevin McCarthy (R-CA) and other congressional leaders on Monday, emphasizing that the U.S. will likely default on its debts in just 10 days unless Congress acts.
“With an additional week of information now available, I am writing to note that we estimate that it is highly likely that Treasury will no longer be able to satisfy all of the government’s obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1,” Yellen said in a two-page letter.
Yellen’s increasingly urgent warnings come as talks between negotiators appointed by President Joe Biden and McCarthy proceeded haltingly through the weekend. Both sides have been working to come to a bipartisan agreement that can pass the GOP-controlled House and the Democratic-controlled Senate. But House Republicans have been complicating the process by adding to their hostage ransom list, adjusting and expanding their demands to agree to raise the debt ceiling.
With the prospect of default days away, Biden on Sunday called on House Republicans to compromise and stop continuing to hold the debt ceiling hostage, warning that their current position is too “extreme.”
Biden and McCarthy had a one-on-one meeting Monday afternoon to ease the tension.
“We don’t have an agreement yet,” McCarthy told reporters after the meeting. “But I did feel like the discussion was productive.”
He added the tone of the talks was “better than any other time we’ve had discussions.”
As the so-called X-date — when the House GOP may push the country to default on its debts — draws closer, the stakes are raised and the pressure to come to an agreement is stronger than ever.
Some Democrats have called on the President to declare that the debt-ceiling law — passed in the early 20th century — violates the 14th Amendment, putting an end to Republicans efforts to extract demands.
The administration has expressed openness to but uncertainty about the viability of that idea.
“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 warned in her letter.
“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm or global leadership position, and raise questions about our ability to defend our national security interests,” she added. “I continue to urge Congress to protect the full faith and credit of the United States by acting as soon as possible.”
Read the full letter here: