Yellen warns that the US could run out of cash by June 1

US Treasury Secretary Janet Yellen has warned that the United States could run out of cash by June 1 if Congress fails to raise or suspend the debt ceiling. Hitting the debt ceiling would mean the U.S. government could no longer borrow money to pay the salaries of government employees and military personnel, Social Security checks or other obligations, such as payments to defense contractors.

Yellen called on Congress to act “as soon as possible” to address the $31.4 billion cap. The debt ceiling has been raised, extended or revised 78 times since 1960.

President Joe Biden called a meeting of congressional leaders on the issue on May 9, but declared at the time that the issue was “not negotiable.”

In that case, House Republicans have demanded drastic spending cuts and a reversal of some aspects of President Biden’s agenda, including his student loan relief program and green energy tax credits, in exchange for votes to raise the debt ceiling. The president, however, is under increasing pressure from business groups, including the US House of Congress, to discuss the Republican proposals.

In a letter to members of Congress, Yellen stated: “We have learned from previous debt limit impasses that waiting until the last minute to suspend or raise the debt limit can cause serious damage to business and consumer confidence, raise short-term costs of borrowing for taxpayers and have a negative impact on the credit rating of the United States”.

Yellen pointed out that it is impossible to know exactly when the United States will run out of cash, but this scenario should not be ruled out in the context of disagreements at the top of power.