Key takeaways:
- Treasury Secretary Janet Yellen warned that the U.S. is likely to run out of money to pay its bills as early as June 1 if Congress does not act to raise or suspend the debt limit.
- The debt limit is the maximum amount of money the U.S. government can borrow to finance its operations and Congress has the power to raise or suspend it.
- Yellen warned that a default on the country’s debt would have “catastrophic economic consequences that would last for decades.”
Treasury Secretary Janet Yellen warned Monday that the U.S. is likely to run out of money to pay its bills as early as June 1 if Congress does not act to raise or suspend the debt limit.
In a letter to House Speaker Kevin McCarthy, Yellen said that with an additional week of information now available, it is “highly likely” that the Treasury will no longer be able to satisfy all of the government’s obligations if Congress has not acted by early June.
Yellen first set the June 1 deadline for the U.S. to extend the borrowing limit on May 15, warning that a first-ever default on the country’s debt would have disastrous economic implications.
The debt limit is the maximum amount of money the U.S. government can borrow to finance its operations. Congress has the power to raise or suspend the debt limit, and the Treasury Department can take certain steps to delay the need for Congress to act.
However, Yellen warned that the Treasury’s ability to take such steps is limited and that Congress must act soon to avoid a default on the country’s debt. She said that a default would have “catastrophic economic consequences that would last for decades.”
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