WASHINGTON听–听US President Joe听叠颈诲别苍听on Monday summoned the four top congressional leaders to the White House next week after the Treasury warned the government could run short of cash to pay its bills by听闯耻苍别.
Treasury Secretary Janet Yellen said in a letter to Congress that the agency will be unlikely to听尘别别迟听all US government payment obligations “potentially as early as听闯耻苍别聽1″听飞颈迟丑辞耻迟听action by Congress.
The estimate raised the risk that the United States is headed for an unprecedented听诲别蹿补耻濒迟听that would shake the global economy, adding new urgency to political calculations in Washington, where Democrats and Republicans were girding for a months-long standoff.
Mr. Biden called Republican House Speaker Kevin听惭肠颁补谤迟丑测听in Jerusalem, where he is on a diplomatic trip, to invite him to a听惭补测听9 White House听尘别别迟ing. The two leaders haven’t sat down to discuss the issue since February.
Mr. Biden聽also extended invitations to House Democratic leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Republican leader Mitch McConnell. McConnell, whose聽聽sidelined him for weeks, said he and听叠颈诲别苍听had a “good conversation” today, adding: “I’m sure we’ll be speaking again.”
House Republicans聽聽to raise the听诲别产迟听limit last week that includes steep cuts to spending from healthcare for the poor to air-traffic controllers, which the Democratic-controlled Senate and听叠颈诲别苍听say they will not approve.
Mr. Biden聽has steadfastly聽聽over the听诲别产迟听肠别颈濒颈苍驳听increase, but will discuss budget cuts after a new limit is passed. Congress has聽听诲别产迟–肠别颈濒颈苍驳听increases with other budget and spending measures.
A White House official said Mr. Biden, who had previously said he wouldn’t听尘别别迟听惭肠颁补谤迟丑测听at all to discuss the听诲别产迟听limit, would “stress that Congress must take action to avoid听诲别蹿补耻濒迟听飞颈迟丑辞耻迟听conditions” on听惭补测听9.
The new potential “X-date,” which takes in to account April tax payments, is largely unchanged from a聽, issued in January, that the government could run short of cash around听闯耻苍别聽5. But Yellen added some wiggle room, noting federal receipts and outlays are “inherently variable.” The actual date that Treasury exhausts extraordinary measures “could be a number of weeks later than these estimates,” she wrote.
“It is impossible to predict with certainty the exact date when Treasury will be unable to pay the government’s bills,” she wrote.
After hitting the $31.4 trillion borrowing cap on Jan. 19, Ms. Yellen previously told Congress that Treasury would keep up payments on听诲别产迟, federal benefits and make other spending by听耻蝉颈苍驳听. One such step Treasury is taking is suspending the sales of securities that state and local governments听耻蝉e to temporarily hold cash.
In 2011, a similar听诲别产迟听肠别颈濒颈苍驳听fight took the country to the brink of听诲别蹿补耻濒迟听and prompted a downgrade of the country’s top-notch credit rating. This time, negotiations听尘补测听be even more difficult,聽.
SPENDING CUT DEMANDS
The April 26 bill passed by the Republican-led House would聽 for solar energy and implement $4.5 trillion in spending cuts – or about 22% – in exchange for a $1.5 trillion increase in the US听诲别产迟听limit.
The bill has no chance of passing the Democrat-controlled Senate and the White House has said Mr. Biden聽would veto the legislation if it did.
Budget analyst Shai Akabas at the Bipartisan Policy Center聽聽the short deadline underscored the urgency of finding a solution to the bitter standoff, and that it dashed hopes that the Congress could negotiate through the late summer months.
A potential听诲别蹿补耻濒迟听within weeks “is not a position befitting of a country considered the bedrock of the financial system, and only adds uncertainty to an already shaky economy,” he added.
BREATHING ROOM
Ms. Yellen’s vagueness on the actual听诲别蹿补耻濒迟听date is due to some fiscal events in听闯耻苍别聽that could buy some breathing room.
If Treasury can make it past early听闯耻苍别聽benefit payments, it could take in significant cash from quarterly estimated tax payments due on听闯耻苍别聽15, analysts say. Then Treasury could float until听闯耻苍别聽30, when it would be able to tap $143 billion in borrowing by suspending reinvestment of maturing securities held by the government retirement funds.
Along with tax receipts, that borrowing would allow it to pay bills well into July.
Nonetheless, the US’s 聽are likely to persist for years to come, with benefit programs like Social Security and Medicare accounting for the largest category of the budget and projected to grow dramatically as the population ages.
As the current debate heats up, Mr. Biden, who is seeking re-election in 2024, is听耻蝉ing the House Republican proposal to tag his opposition as an economic threat to local economies.
