In her second message to Congress in two weeks, she added that the debt ceiling could become binding by June 1.
The new date reflects more data on revenue and payments since Yellen told lawmakers in a letter on May 1 that the department may run out of money to pay government bills as early as June, possibly as early as June.
Yellen has repeatedly warned that failure by Congress to raise the $31.4 trillion federal debt ceiling could lead to a “constitutional crisis” and unleash “economic and financial catastrophe” for the United States and global economies.
The Congressional Budget Office said last week that the US faces a “significant risk” of defaulting on its obligations during the first two weeks of June without raising the debt ceiling.
A short term solution
However, analysts noted that the ministry could last through August without default if it can collect quarterly tax revenue on June 15 and access the new borrowing measures that become available on June 30.
In today’s letter, she urged Yellen to act as quickly as possible.
“We have learned from the previous debt ceiling impasse that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively affect the credit rating of the United States,” she said.
“If Congress fails to increase the debt limit, it will cause great suffering to American families, harm our position as global leadership, and raise questions about our ability to defend our national security interests,” she added.
Yellen’s second message to Congress came on the eve of an expected meeting between US President Joe Biden and House Speaker Kevin McCarthy for talks on the debt ceiling.
Biden heads to Japan on Wednesday to attend the G7 summit, then to Australia, a trip that takes about a week.
McCarthy said Monday that there was no progress in the marathon conversations at the staff level from the administration and Congress all weekend.
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