US President Joe Biden on Monday summoned the four top congressional leaders to the White House next week after the Treasury warned the government could run short of cash to pay its bills by June.
\nTreasury Secretary Janet Yellen said in a letter to Congress that the agency will be unlikely to meet all US government payment obligations \u201cpotentially as early as June 1\u201d without action by Congress.
\nThe estimate raised the risk that the United States is headed for an unprecedented default that would shake the global economy, adding new urgency to political calculations in Washington, where Democrats and Republicans were girding for a months-long standoff.
\nBiden called Republican House Speaker Kevin McCarthy in Jerusalem, where he is on a diplomatic trip, to invite him to a May 9 White House meeting. The two leaders haven\u2019t sat down to discuss the issue since February.
\nBiden also extended invitations to House Democratic leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Republican leader Mitch McConnell. McConnell, whose fall in March sidelined him for weeks, said he and Biden had a \u201cgood conversation\u201d today, adding: \u201cI\u2019m sure we\u2019ll be speaking again.\u201d
\nHouse Republicans passed a bill to raise the debt limit last week that includes steep cuts to spending from healthcare for the poor to air-traffic controllers, which the Democratic-controlled Senate and Biden say they will not approve.
\nBiden has steadfastly said he will not negotiate over the debt ceiling increase, but will discuss budget cuts after a new limit is passed. Congress has often paired debt-ceiling increases with other budget and spending measures.
\nA White House official said Biden, who had previously said he wouldn\u2019t meet McCarthy at all to discuss the debt limit, would \u201cstress that Congress must take action to avoid default without conditions\u201d on May 9.
\nThe new potential \u201cX-date,\u201d which takes in to account April tax payments, is largely unchanged from a previous estimate, issued in January, that the government could run short of cash around June 5. But Yellen added some wiggle room, noting federal receipts and outlays are \u201cinherently variable.\u201d The actual date that Treasury exhausts extraordinary measures \u201ccould be a number of weeks later than these estimates,\u201d she wrote.
\n\u201cIt is impossible to predict with certainty the exact date when Treasury will be unable to pay the government\u2019s bills,\u201d she wrote.
\nAfter hitting the $31.4 trillion borrowing cap on Jan. 19, Yellen previously told Congress that Treasury would keep up payments on debt, federal benefits and make other spending by using extraordinary cash management measures. One such step Treasury is taking is suspending the sales of securities that state and local governments use to temporarily hold cash.
\nIn 2011, a similar debt ceiling fight took the country to the brink of default and prompted a downgrade of the country\u2019s top-notch credit rating. This time, negotiations may be even more difficult, veterans of 2011\u2019s face-off say.
\nSPENDING CUT DEMANDSThe April 26 bill passed by the Republican-led House would slash tax incentives for solar energy and implement $4.5 trillion in spending cuts \u2013 or about 22% \u2013 in exchange for a $1.5 trillion increase in the US debt limit.
\nThe bill has no chance of passing the Democrat-controlled Senate and the White House has said Biden would veto the legislation if it did.
\nBudget analyst Shai Akabas at the Bipartisan Policy Center said the short deadline underscored the urgency of finding a solution to the bitter standoff, and that it dashed hopes that the Congress could negotiate through the late summer months.
\nA potential default within weeks \u201cis not a position befitting of a country considered the bedrock of the financial system, and only adds uncertainty to an already shaky economy,\u201d he added.
\nBREATHING ROOMYellen\u2019s vagueness on the actual default date is due to some fiscal events in June that could buy some breathing room.
\nIf Treasury can make it past early June benefit payments, it could take in significant cash from quarterly estimated tax payments due on June 15, analysts say. Then Treasury could float until June 30, when it would be able to tap $143 billion in borrowing by suspending reinvestment of maturing securities held by the government retirement funds.
\nAlong with tax receipts, that borrowing would allow it to pay bills well into July.
\nNonetheless, the US\u2019s debt ceiling battles are likely to persist for years to come, with benefit programs like Social Security and Medicare accounting for the largest category of the budget and projected to grow dramatically as the population ages.
\nAs the current debate heats up, Biden, who is seeking re-election in 2024, is using the House Republican proposal to tag his opposition as an economic threat to local economies.<\/p>\n","protected":false},"excerpt":{"rendered":"
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