U.S. 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, APA reports citing Reuters.
Treasury Secretary Janet Yellen said in a letter to Congress that the agency will be unlikely to meet all U.S. government payment obligations "potentially as early as June 1" without action by Congress.
The 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.
Biden 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't sat down to discuss the issue since February.
Biden 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 "good conversation" today, adding: "I'm sure we'll be speaking again."
House 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.
Biden 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.
A White House official said Biden, who had previously said he wouldn't meet McCarthy at all to discuss the debt limit, would "stress that Congress must take action to avoid default without conditions" on May 9.
The new potential "X-date," 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 "inherently variable." The actual date that Treasury exhausts extraordinary measures "could be a number of weeks later than these estimates," she wrote.
"It is impossible to predict with certainty the exact date when Treasury will be unable to pay the government's bills," she wrote.
After 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.
In 2011, a similar debt ceiling fight took the country to the brink of default and prompted a downgrade of the country's top-notch credit rating. This time, negotiations may be even more difficult, veterans of 2011's face-off say.
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