U.S. government could run out of money, measures by June 1, Yellen tells McCarthy

Chip Somodevilla/Getty Images News

The Treasury Department could run out of extraordinary measures to pay the government's bills as early as June 1, if the government's debt limit is not raised or suspended, Treasury Secretary Janet Yellen said in a letter to House Speaker Kevin McCarthy and Congressional leadership on Monday.

That contrasts with her update in January that estimated it was unlikely to run out of cash and extraordinary measures before early June. The latest estimate was calculated after the Treasury Department reviewed recent federal tax receipts.

"Given the current projections, it is imperative that Congress act as soon as possible to increase or suspend the debt limit in a way that provides longer-term certainty that the government will continue to make its payments," she emphasized.

As part of the extraordinary measures, the Treasury is suspending the issuance of State and Local Government Series Treasury Securities, special purpose Treasury securities issued to states and municipalities that help them comply with certain tax rules. That move will "deprive state and local governments of an important tool to manage their finances," Yellen said.

She once again reminded Congressional lawmakers the importance of dealing with the debt limit before it's too late. "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 said. Failing to increase the debt limit, "would cause severe hardship on American families."

Last month, McCarthy introduced a bill that proposed raising the $31.4T debt ceiling by $1.5T along with limiting federal spending.

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Comments

[duggar]

Gee whiz; does this imply there really is no such thing as a free lunch, and even voter bribes have to be paid by...the voters? Whodda thunk it?!

[rhurry]

Janet, Biden's spending spree happened on your watch and you either agreed with it or didn't object. You are now and have always been a token appointee of the left. No one who's paying attention has any respect for you.

[Norris56]

When the economy is good as it is now with nearly full employment, it is time to pay off the deficit, the time to borrow is when the economy is poor. Therefore, we must raise taxes and start paying off the debt.

[darnoc111]

@Norris56 Let me fix your comment -- time to cut spending and regulations and let the economy boom so that tax receipts increase so we can pay down debt. Inflation will become worse till the excess money from the gov is rung out of the economy.
Raising taxes will slow the economy and tax receipts will fall, gov spending will not be curtailed and thus deficits will rise. Inflation will become worse because fake money will be chasing few items.

[Norris56]

@darnoc111 Why is government spending bad? When the economy is down, government spending may be the only spending, keeping people employed, when there is full employment, pay down that debt. The time is now to raise money and pay off the debt incurred during bad times, if we don't pay it down now during full employment, when will there be a better time?

[Fischel]

@darnoc111 just out of curiosity, what do you think Elon Musk (and all the other rich folks) will stop buying if their taxes are raised?

[SailFast-MPH]

If Yellen was doing her job, she would state we need to cut government spending. Hard decisions but decisions that are necessary. She is just another politician with an agenda. Step up Janet and lead.

[MrGardener]

@SailFast-MPH No, it's more like, Step down, Janet, and let someone in who will lead.

[Golfortennis]

@MrGardener Problem is, the guy who would nominate the replacement will choose someone just as capable as her.

Seems elections have consequences.

[rbrown8016]

As long as both parties are unwilling to even DISCUSS entitlements...this problem can't be fixed.

[eshali]

My only hope is that the Republicans do not raise the Debt limit on a promise by the Democrats to look at reductions! This nonsense has to stop and term limits and a balanced budget must be started!

[faw872]

Balance the budget! Spending increased 50% under Trump during Covid. Why can't we cut back?!

2022 United States federal budget – $6.3 trillion (submitted 2020 by President Biden)
2021 United States federal budget – $6.8 trillion (submitted 2020 by President Trump)
2020 United States federal budget – $6.5 trillion (submitted 2019 by President Trump)
2019 United States federal budget – $4.4 trillion (submitted 2018 by President Trump)
2018 United States federal budget – $4.1 trillion (submitted 2017 by President Trump)
2017 United States federal budget – $4.2 trillion (submitted 2016 by President Obama)
2016 United States federal budget – $4.0 trillion (submitted 2015 by President Obama)
2015 United States federal budget – $3.9 trillion (submitted 2014 by President Obama)
2014 United States federal budget – $3.5 trillion (submitted 2013 by President Obama)
2013 United States federal budget – $3.8 trillion (submitted 2012 by President Obama)[126]
2012 United States federal budget – $3.7 trillion (submitted 2011 by President Obama)
2011 United States federal budget – $3.8 trillion (submitted 2010 by President Obama)
2010 United States federal budget – $3.6 trillion (submitted 2009 by President Obama)
2009 United States federal budget – $3.5 trillion (submitted 2008 by President Bush)
2008 United States federal budget – $2.9 trillion (submitted 2007 by President Bush)

[pdrozin]

@faw872 Agreed! We should be able to get back to at least pre-covid budgets plus whatever the typical yearly increase for inflation. Prior to covid, the increases seem to be somewhat inline with previous increases. That being said, would be nice to see government clean house, eliminate loser programs, re-evaluate their budget as we at home or in business are expected to do.

[rbrown8016]

@faw872 Remember that Obama added more debt than all previous presidents combined. Regan was bad, Bush was bad, Obama was bad, Trump was bad, Biden is just as awful. This is not a republican vs. democrat problem. Both parties are out of control. Can't go on forever...and this movie does NOT have a happy ending.

[pdrozin]

@rbrown8016 Unfortunately true!

[congressional trade researcher]

I anticipate that a number of comments will be without data, but from popularism, which is when a person is on a political side, left or right, and is fixed on that party without regard to rational thought.
Ray Dalio has some wisdom regarding this.

[Big Tex 6988]

Much as Elon Musk proved with Twitter. We could fire 80% of the unelected bureaucrats and the country would improve operationally.

[3carmonte]

@big Tex 6988 It's more encompassing than that. Check this out.
www.youtube.com/... (At 3:07 it got very informative for me).

[GHFISHER]

A significant number of comments want the US to reduce spending. Easy to say but not so easy to do. Open to suggestions on exactly what cuts to make. BUT also ask that any identified cut also list the effect and actual value of the cut.

[eshali]

@GHFISHER well, a work rule would be nice for living off the government and would give the people some dignity and also yield more taxes: this should include the subsidized housing, rent control, SNAP, food stamps, Medicaid and other programs for the "poor"!

[GHFISHER]

@eshali On the surface this would seem to be a good idea but a deeper dive into the cost/benefits - not so much so. Please read carefully:

www.heraldnet.com/...

[Rino716]

maybe start with removing 75% of govt officials and un-elected offices and officers. That is a good start.

[3carmonte]

So, what does everybody think about Biden's ability to override this process with another executive order? Because that is where this is going. Your dictatorial republic in action. Pffffft.

[blain]

@3carmonte He probably won't have to do anything, because this economy is one of the best the world has ever seen.
BUT if Uncle Joe does have to issue yet another executive order, he'd only be doing it to save our Democracy and keep it safe from those that are a threat to our National Security.
If someone nicks Joe, shaving him, he doesn't bleed red, he bleeds Red White and Blue. As one of our founding fathers he should have a monument erected in is honor.

[tdstiff_00]

We're not a Democracy. We're a Representative Republic.

[Cranky Old Guy]

@tdstiff_00 You're actually both. This idea of not being a democracy is being used to soften people up to authoritarianism.

[Chancer]

GOP House should hold out for an acceptable deal.

Let us see if Emperor "with no clothes" Biden will pull one of his illegal tricks.
That might wake up the go along GOP senators.

[DwightK]

@Chancer

Too late for the GOP. They had their chance. The should have never passed the turnip's tax cuts. It was like pouring gasoline on an open fire. Obama - with the "help" of the tea-party - had already reduced spending during his second term. The nitwit should have kept those in place.

[mac ron]

So, good ole America can fund the worlds poor with a porous border, incentivizing, free schooling, healthcare and social service, fund endless wars somewhere with “what ever it takes", shut down the economy during a mild flu for the working healthy, regardless of collateral damage, increase taxes and regulation to stifle the productive and then print money exponentially, then suddenly raise interest rates quickly to make a banking crisis and anger the world with control by threatening isolation from swift and currency controls thereby jeopardizing the reserve status, then threaten to default by risking political games with the debt limit. With economic issues like this, who needs a competent administration. Speaking about competent administration….

[craftbrewinfo]

Well why don’t they just print more money ? Seems simple to these simpletons , right ??

[Mountainbarony]

start by not paying congress' salary, perks, health care, etc...... close their dining rm, gym, med center.......and tell them they'll restart when they grow up.
Just like your mommy and daddy did.

[Jeffrey Rose]

Spending has to get under control... There is no choice and if the Democrats cants see that then we are already doomed. Deficits do matter...no matter what the MMT people say

[tlapp]

@Jeffrey Rose MMT just the new name for the same failed policy tried many times before.

[42see]

@Jeffrey Rose both parties create deficits. Both parties are owned by corporate funding. Both.

[tlapp]

Cue the panic porn to justify unlimited deficit spending.

[craftbrewinfo]

@tlapp exactly

[Amos Tuck]

DEBT CEILING STAND-OFF WILL TAKE DOWN THE STOCK MARKET.

Two potential outcomes:

1.) Default.

Stocks fall 35%. *

2.) Resolution.

Draconian spending cuts and a $1T liquidity drain (borrowing) so Treasury can replenish its cash hoard.

Stocks fall 20%. *

The market's not handicapping this situation properly.

[Bill in EL]

Biden wobbling. Why doesn’t SA have more balance?
www.breitbart.com/...