As the debt ceiling impasse between President Joe Biden and GOP members of Congress continues, the U.S. Treasury is asking federal agencies if they can make payments "at a later date" to avoid a possible default in early June.
Sources told the Washington Post that the move is an attempt by the Biden administration and Treasury Secretary Janet Yellen to buy time before the United States runs out of money to pay its obligations for the first time in history.
"Please stress to your staff the importance of these updates during this time and to ensure that your agency’s reports are accurate," the Post reported of an internal memo it reviewed from Treasury’s Fiscal Assistant Secretary David Lebryk said. "Your reporting offices should be reconciling reported amounts to actual payment activity to ensure the reliability of these reports during the critical period."
The memo asked the agency to update Treasury on all "deposits and disbursements" between $50 million to $500 million at least two days in advance, and five days before making payments over $500 million, the report said.
Yellen sent another letter Monday to Republican House Speaker Kevin McCarthy reiterating her position that the Treasury’s funds will dry up in early June, possibly by June 1, if the debt limit is not raised allowing the nation to borrow enough to pay its bills.
"With an additional week of information now available, I am writing to note that we estimate that it is highly likely that Treasury will no longer be able to satisfy all of the government's obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1," Yellen wrote Monday. "These estimates are based on currently available data, and federal receipts, outlays, and debt could vary from these estimates. I will continue to update Congress as more information becomes available."
McCarthy and Biden met Monday to discuss the issue and while both men said the talks were "productive," no agreement was reached.
Yellen said that the continued impasse could "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."
"In fact, we have already seen Treasury's borrowing costs increase substantially for securities maturing in early June," her letter said. "If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests."
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