Since hitting the current statutory limit of US$31.4 trillion ($41.97 trillion) in January, the Treasury has been staving off a possible default on federal obligations by using special accounting manoeuvres. Yellen’s new timeline reflects the department’s latest thinking on when that headroom is likely to be exhausted.
Treasury Secretary Janet Yellen told US lawmakers that her department’s ability to use special accounting manoeuvres to stay within the federal debt limit could be exhausted as soon as the start of June.
“Our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1,” Yellen said in a letter to Speaker Kevin McCarthy and other congressional leaders from both parties. Given that revenue and spending flows are variable, “the actual date that Treasury exhausts extraordinary measures could be a number of weeks later than these estimates,” she wrote.
