Yellen warns the U.S. could default by June 1 if the debt ceiling is not raised
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(Kitco News) U.S. Treasury Secretary Janet Yellen said the U.S. could run out of money to pay its bills by June 1 if Congress fails to raise or suspend the debt ceiling. This is earlier than previously thought.
"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," Yellen wrote in a letter to House Speaker Kevin McCarthy.
She noted that the new estimate is based on "currently available data," adding that "the actual date that Treasury exhausts extraordinary measures could be a number of weeks later than these estimates."
Yellen promised to keep Congress updated and warned that it was "impossible to predict with certainty the exact date when Treasury will be unable to pay the government's bills."
She also urged Congress to act as soon as possible, saying that failure to do so would lead to serious harm, damaging business and consumer confidence, raising short-term borrowing costs, and negatively impacting the credit rating of the U.S.
"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," Yellen wrote.
U.S. Treasury Secretary's letter comes as debt ceiling talks stalled after the Republican-led U.S. House of Representatives passed a bill linking $4.8 trillion of spending cuts with the debt ceiling increase. The bill has no chance of passing the Democratic-led Senate.
Gold continued to trade below $2,000 an ounce after the letter was released, with markets focused on Wednesday's Federal Reserve rate announcement. June Comex gold futures were last at $1,991.10, down 0.40% on the day.