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US Treasury Secretary Janet Yellen listens during a signing ceremony for the Indonesia Infrastructure and Finance Compact, at the International Monetary Fund (IMF) headquarters in Washington, DC, on April 13, 2023.
Stefani Reynolds | AFP | Getty Images
WASHINGTON — Treasury Secretary Janet Yellen on Monday warned that the United States may run out of measures to pay its debt obligations by June 1, earlier than the government and Wall Street had been expecting.
In a letter to House Speaker Kevin McCarthy, Yellen said new data on tax receipts forced the department to move up its estimate of when the Treasury Department “will be unable to continue to satisfy all of the government’s obligations” to “early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time.”
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This date is earlier than Wall Street economists were expecting. Goldman Sachs’ latest estimate this week put the deadline at some point in late July, though the bank’s economists acknowledged that weaker-than-expected tax receipts could move that timeline up further.
The letter added a new sense of urgency to stalled negotiations between President Joe Biden and McCarthy’s Republican majority in the House.
The White House has so far refused to participate in talks as long as McCarthy is still linking a debt ceiling vote to sweeping cuts to federal spending.
Yellen’s letter comes less than week after a Republican bill to raise the debt limit and slash government funding passed the House, but only after McCarthy made 11th hour changes in order to win over GOP holdouts.
The Goldman Sachs estimate noted that so far there have been few ripples in the markets from rising debt-related risk. But this could change, analysts wrote, “once the Treasury announces a specific deadline for Congress to raise the debt limit.”
CNBC’s John Melloy contributed to this story.
This is breaking news. Please check back for updates.
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