Janet Yellen: U.S. may hit debt ceiling as quickly as June 1

WASHINGTON — Treasury Secretary Janet Yellen notified Congress on Monday that the U.S. is projected to succeed in its debt restrict as early as June 1, if the physique doesn’t elevate or droop the debt restrict earlier than then.

In a letter to House and Senate leaders, Yellen urged Congress “to protect the full faith and credit of the United States by acting as soon as possible” to handle the $31.4 trillion restrict on its authorized borrowing authority.

“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,” she mentioned within the letter.

The Treasury mentioned Monday it plans to extend its borrowing throughout the April to June quarter of this yr, even because the federal authorities is near breaching the debt restrict.

The U.S. plans to borrow $726 billion throughout the quarter. That’s $449 billion greater than projected in January, as a consequence of a decrease beginning-of-quarter money stability and projections of lower-than-expected earnings tax receipts and better spending.

While Russia’s invasion of Ukraine stays a burden on U.S. financial progress, Treasury officers say the talk over the debt ceiling poses the best danger to the U.S. monetary place.

Eric Van Nostrand, performing assistant secretary for financial system coverage, mentioned in a press release that “even if Congress ultimately raises the debt limit before a default occurs, the ensuing uncertainty could raise borrowing costs and induce other financial stress that would weaken our labor market and our standing in the world.”

In January, Yellen despatched a letter to congressional leaders, stating that her division had begun resorting to “extraordinary measures” to keep away from a federal authorities default. She mentioned it’s “critical that Congress act in a timely manner” to boost or droop the debt restrict.

Democrats and the White House are pushing for Congress to extend the federal debt restrict. President Joe Biden needs the cap raised with out negotiation. The House Republican majority has most just lately handed a invoice to safe spending cuts in change for a debt restrict improve.