U.S. Treasury Secretary Janet Yellen informed Congress last Friday that if an agreement is not reached to raise the debt ceiling, the government may default on its debt on June 5. In a letter to House Republican Majority Leader Kevin McCarthy, Yellen extended the deadline marking the end of reserves the country must use to meet its payment obligations by four days. She urged legislators to act "as soon as possible" to avoid default.
Yellen recalled that, in the first two days of June, her department has to disburse $130 billion for Social Security, veterans and Medicaid recipients, which will leave the reserves at "an extremely low level of resources." She also warned that, with such a low level of funds, the "Treasury will have insufficient resources to satisfy the government's obligations if Congress has not raised or suspended the debt limit by June 5," referring to another $92 billion payment for Social Security and Medicaid.
Talks between congressional Republicans and the White House continued late Friday without any concrete results. Kristalina Georgieva, director of the International Monetary Fund, also called for an agreement as soon as possible. "We are looking forward to seeing a resolution," said Georgieva, who also suggested the possibility of the U.S. removing the rule dictating a debt ceiling that cannot be exceeded, so that scenarios such as the one currently being experienced do not occur.