New projections from the U.S. treasury predict that the government will be broke by early June.
Treasury Secretary Janet Yellen issued a new warning to congressional leaders on Monday saying that the government will default on its financial obligations as early as June 1 if the debt limit is not raised or suspended soon, according to CBS News.
As The Dallas Express reported, the U.S. government has been on the brink of default since reaching its $31.4 trillion debt ceiling on January 19.
This means potentially not making good on its payments, which include benefits to those on Social Security and Medicare, military salaries, interest on the national debt, tax refunds, and more.
A widespread recession and the loss of millions of jobs are forecast were this to happen.
Yellen has issued several projections to Congress, with her latest letter explaining that the nation could default “a number of days or weeks later” than June 1 due to the variability of the available economic data.
Yet Yellen also wrote how important swift action is to safeguarding Americans’ financial interests, referring to the “serious harm” of waiting until the last minute. Previous looming debt crises eroded the confidence of businesses and consumers, led to higher short-term borrowing costs, and lowered the nation’s credit rating, she wrote.
“In fact, we have already seen Treasury’s borrowing costs increase substantially for securities maturing in early June,” Yellen highlighted in the letter.
The road to resolving the debt limit issue has already been a long one.
As The Dallas Express reported, neither Democrats nor Republicans have appeared willing to compromise on the matter.
At contention is the possibility of creating work requirements for the Supplemental Nutrition Assistance Program and the Temporary Assistance for Needy Families program.
President Joe Biden and congressional leaders are scheduled to meet on Tuesday before the president travels to Japan, according to CBS News.
While Biden seemed optimistic about reaching an agreement when speaking to reporters on Sunday, House Speaker Kevin McCarthy (R-CA) is less so, according to CBS News.
“We can raise the debt ceiling if we limit what we’re going to spend in the future,” McCarthy told Reuters on May 16, explaining that the GOP will not agree to anything without making spending cuts.
Yet some have suggested too many people are involved in the debt limit talks for them to be productive; as Senator John Thune (R-SD) quipped, there are “too many cooks,” according to Reuters.
The May 16 meeting will include Biden, McCarthy, Democratic Senate Majority Leader Chuck Schumer (D-NY), Senator Mitch McConnell (R-AL), and Representative Hakeem Jeffries (D-NY).