Memorial Day weekend kicked off Saturday with Democrats and Republicans having yet to reach a deal on the U.S. debt ceiling—but having more time to negotiate before the government defaults on its debt.
Talks between the White House and GOP congressional leaders are set to resume Tuesday, but they have more breathing room to hammer out an agreement than they did on Friday.
At the week’s end, Treasury Secretary Janet Yellen told House Speaker Kevin McCarthy that she expects the government to run out of cash to pay its bills on June 5. She had given June 1 as the so-called X-Date, or default deadline.
Yellen, in a letter dated Friday, wrote: “Based on the most recent available data, we now estimate that Treasury will have insufficient resources to satisfy the government’s obligations if Congress hasn’t raised or suspended the debt limit by June 5.”
Yellen went on to note that there are $130 billion of payments scheduled for the first two days of June for veterans and Social Security and Medicare recipients. During the week of June 5, the Treasury Department has another $92 billion of payments to make, and Yellen warned that the Treasury’s funds would be “inadequate” to satisfy these obligations.
Since warning of the so-called X-date earlier this year, the government has resorted to so-called “extraordinary measures” to pay its bills. Such measures include temporarily suspending investments in government workers’ savings plans and moving money between government agency accounts. Those measures are temporary fixes—and those found pockets of money the government is able to tap have dwindled as the X-date draws near.
Yellen urged Congress to act “as soon as possible,” warning that waiting until the last minute “can cause serious harm to business and consumer confidence.”
Going into the holiday weekend, there was some reason for hope that a deal would be reached. On Friday, both President Joe Biden and House Republicans gave signs that a deal was near, with Biden saying a deal was “very close.”
Meanwhile, Rep. Patrick McHenry (R., N.C.) cautioned that “things we have to just work through. And I don’t know how long that’s gonna take. I don’t know if that’s hours or days.”
Once a deal is struck, it would also have to be voted on in Congress—a process that could take days, meaning that even with the slightly expanded timeline of June 5, any deal would still be coming in under the wire.
Write to Carleton English at carleton.english@dowjones.com
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