Treasury Secretary Janet Yellen on Friday warned that the U.S. government will not be able to pay all of its bills on time if Congress does not raise the debt ceiling by June 5.
In a letter to House of Representatives Speaker Kevin McCarthy and other congressional leaders, she set a more specific deadline for legislators to strike a deal on the limit, which defines the maximum amount of money the government can legally borrow to cover its spending.
Previously, Yellen had estimated the government could run out of money as soon as June 1. President Joe Biden and congressional Republicans, who want to slash the country's deficit, are still trying to narrow differences over a solution to avert an unprecedented default.
"Based on the most recent available data, we now estimate that Treasury will have insufficient resources to satisfy the government's obligations if Congress has not raised or suspended the debt limit by June 5," Yellen said.
She said that more than $130 billion will be spent in the first two days of next month as scheduled for social welfare and an estimated $92 billion will be needed for additional payments in the week of June 5.
She called on congressional leaders to reach an early agreement, saying 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."