Where do things stand as the US rolls back debt ceiling deadline?

by | May 26, 2023 | World

The secretary of the United States Treasury, Janet Yellen, has said the government will run out of funds to cover its financial obligations by June 5 if the current spending limit of $31.4 trillion is not raised before then.Yellen’s announcement, which came in the form of a letter to the US Congress on Friday, pushes back the deadline for a potential default from an earlier estimate that the Treasury could run out of cash as soon as June 1.
“During the week of June 5, Treasury is scheduled to make an estimated $92 billion of payments and transfers,” which includes a nearly $36bn quarterly adjustment towards Social Security and Medicare trust funds, Yellen wrote in the letter.
“Therefore, our projected resources would be inadequate to satisfy all of these obligations,” she said.
The expanded deadline gives legislators more breathing room as they try to reach an agreement to increase the US spending limit.
Congress is tasked with increasing the nation’s debt ceiling, and Republican legislators have used their majority in the US House of Representatives as leverage to demand cuts to social programmes in exchange for a ceiling increase as a default looms on the horizon.

Where do things stand?
Over the last several weeks, Republican House Majority Leader Kevin McCarthy has been in talks with President Joe Biden’s administration as they try to reach an arrangement and avoid default, which experts say could have devastating effects on the US and global economy.
Speaking earlier on Friday, McCarthy said that negotiators were working to “finish the job” but did not know if a deal would be reached within 24 hours.
The two sides are looking at an agreement that wou …

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