Yellen writes to warn McCarthy there could be no funds to run government in 10 DAYS

It’s ‘highly likely’ US will run out of money by June 1: Treasury Secretary Yellen writes to warn Kevin McCarthy there could be no funds to pay government’s bills in 10 DAYS ahead of his talks with Biden

  • Speaker McCarthy set to sit down with  Biden for high stakes talks on Monday
  • Yellen said it was likely government wouldn’t be able to meet all debts by June 1 
  • High stakes meeting follows breakdown in talks while Biden was in Japan 

Treasury Secretary Janet Yellen warned House Speaker Kevin McCarthy the nation would soon no longer be able to meet its debts – as McCarthy said the White House needed to reach agreement this week to get any deal across the line in time. 

Yellen wrote McCarthy Monday about the Treasury’s ‘ability to continue to finance the operations of the federal government’ having breached the statutory debt limit and exhausted extraordinary measures.

She updated a her last estimate, saying that ‘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.’

She applied pressure hours before McCarthy is set to sit down with President Joe Biden, after a breakdown in negotiations during Biden’s trip to Japan. The two men agreed to meet Monday during a phone call while Biden was flying home on Air Force One.

House Speaker Kevin McCarthy is calling for a deal this week in order to get any agreement before lawmakers in time to avoid a potential default. He sits down with President Joe Biden on Monday at the White House 

‘We could get a deal tonight, we could get a deal tomorrow, but you’ve got to get something done this week to be able to pass it and move it to the Senate,’ McCarthy told reporters in the Capitol.

He referenced a commitment he made to rank-and-file members during his arduous bid to get elected speaker to provide members with three days to review legislation.

That was in response to years of leaders cutting deals and rushing them to the floor before members got the chance to pore over the details.

Treasury Secretary Janet Yellen warned it is 'highly likely that Treasury will no longer be able to satisfy all of the government's obligations' if Congress doesn't act to lift or suspend the debt limit by June 1

Treasury Secretary Janet Yellen warned it is ‘highly likely that Treasury will no longer be able to satisfy all of the government’s obligations’ if Congress doesn’t act to lift or suspend the debt limit by June 1

President Joe Biden went after MAGA Republicans in Japan. He agreed to negotiate directly with McCarthy on the budget

President Joe Biden went after MAGA Republicans in Japan. He agreed to negotiate directly with McCarthy on the budget

He also noted it takes time for staff to put any agreement into writing, and some time for the Senate to act – although the chamber has been known to speed through legislation when it is facing a high pressure deadline. 

‘We’ve got the teams back together, working. You know, time is of the essence,’ he said in response to questions in the Capitol by CNN. ‘Time is critical. We’ve got 10 days to go.’ 

McCarthy also indicated the final vote may be bipartisan – amid speculation conservative Republicans may balk over even challenge his speakership if he moves too far in Biden’s direction.

 ‘I firmly believe what we’re negotiating right now, a majority of Republicans will see that it is a right place to put us on the right path,’ he said.

The GOP House majority is just 222-213, with Democrats holding a 51-49 Senate majority.

In the Capitol, White House aides Shalanda Young, Louisa Terrell and Steve Ricchetti have been meeting with GOP Reps. Garret Graves and Patrick McHenry to try to reach the outlines of a deal. Talks continued Sunday night, with no signs the two sides had reached agreement on spending cuts demanded by Republicans.

In her letter, Yellen spoke about the costs of debt limit brinksmanship. 

‘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. In fact, we have already seen Treasury’s borrowing costs increase substantially for securities maturing in early June. 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,’ she wrote.

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