House Republicans are not accepting Treasury Secretary Janet Yellen’s warning that the US government will run out of money as soon as June 1, or her dire predictions of default, are undermining the urgency of raising the debt limit.
“We want to see more transparency on how they got to that date,” House Majority Leader Steve Scalise told reporters after a closed meeting on Tuesday. “It looks like they are hedging now and leaving the door open to move that date back.”
One House Republican, who asked not to be named to speak candidly about his party’s assessment, said he believes if the Treasury Department ends its extraordinary measures to pay the bills, before Congress allows it to borrow more.
White House press secretary Karine Jean-Pierre dismissed Republican efforts to play down the risk of default.
“Everyone understands that for the first time the consequences of default would be dire for the American people and for the American economy,” Jean-Pierre told reporters at the White House. “It will wipe out 8 million jobs, trigger a recession, destroy retirement accounts, increase costs, damage our international reputation.”
The Treasury Department last week asked government agencies to ensure they are providing “accurate and timely information” to help forecast daily cash flow and debt levels, according to a memo obtained by Bloomberg News. .
The Washington Post first reported on the memo and cited people familiar with it who said the department is also asking whether there are any payments that could be made at a later date.
Yellen has repeatedly said that the Treasury risks not having enough money to meet all payments by the wave of tax receipts expected on June 15.
The Treasury is not alone in its projections. congressional budget office Where is Without a loan deal, there is a “significant risk” of defaulting on payments in the first two weeks of June. The bipartisan policy center said Tuesday that there is an “elevated risk” of hitting that point between June 2 and 13.
Goldman Sachs Group Inc. And analysts at Wrightson ICAP have identified June 7-8 as a major danger zone; Morgan Stanley says June 8 is its base case for the ex-date, when Treasuries run out of sufficient cash.
Far from the urgency communicated by the White House, US corporate executives and financial markets, much of the Republican convention is a troubling sign for the talks continue on tuesday, House Republicans and representatives from the Biden administration remained at the Capitol late Monday and met again on Tuesday to continue rolling out business proposals.
Representative Chip Roy of Texas called the default warnings a “manufactured crisis” to force Republicans to back down from some demands.
“The fact is we will have cash in June,” Roy told reporters on Tuesday. “The fact is, we’re not going to default on our loan. That’s absolutely false. We have the money to do it.”
Roy and other conservatives such as Matt Gaetz of Florida questioned Yellen’s designation of June 1 as an X-date, telling reporters to “ask her about her Ouija board.”
Speaking to reporters at the Capitol on Monday night after returning from the White House, McCarthy insisted that the real crisis was unsustainable levels of government spending that must be reduced. Asked Tuesday whether he believes June 1 is, in fact, the deadline for his talks with President Joe Biden, McCarthy was non-committal.
“I don’t choose deadlines,” McCarthy said. “Janet Yellen picks the deadline. She determines what it is and I just go with what she says.
For weeks, White House officials have noted that they have publicly stressed the need to quickly raise the debt ceiling. Last week, Biden canceled planned stops in Papua New Guinea and Australia after the Group of Seven meeting in Japan to return to Washington for talks.
Jean-Pierre told reporters Saturday that Biden stressed the urgency with McCarthy and other congressional leaders before leaving for his trip.
“The President has sat down with leaders of Congress twice recently to listen to them, to talk, to talk about their budget, to talk about the urgency of meeting the debt ceiling, Congress is doing its job,” she said.
While major banks and financial institutions making contingency plans In the event of a technical glitch, the true consequences for the global economy have not yet been tested.
Jamie Dimon, chief executive officer of JPMorgan Chase & Co, warned earlier this month that even going over the edge is dangerous, with unpredictable consequences.
Yellen has declined to indicate how the Treasury would proceed if the cash runs out, saying only that “there will be tough choices to make.”
-With assistance from Ari Nutter and Justin Sink.