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© Reuters. FILE PHOTO: U.S. Treasury Secretary Janet Yellen speaks during a news conference at the Treasury Department in Washington, U.S., April 11, 2023. REUTERS/Elizabeth Frantz/
By David Lawder and Doina Chiacu
WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen on Wednesday maintained early June as a debt ceiling default deadline and said she will update Congress shortly about government finances.
Speaking at a Wall Street Journal forum, Yellen said it was hard to be precise about exactly which day the U.S. government will run short of funds, but added that she will try to increase the level of precision on a date, based on incoming government receipts.
Some private forecasters, including Goldman Sachs (NYSE:GS) and Moody's (NYSE:MCO) Analytics, have estimated that a default could come a few days after June 1, between June 6 and June 9.
Yellen reiterated on Monday she expects to be able to pay the U.S. government's bills only until June 1 without a debt limit increase, leaving just over a week for White House negotiators and congressional Republicans to reach a compromise and see the deal approved by Congress.
Yellen said that she thought a deal that wins bipartisan support could be achieved, adding that President Joe Biden's negotiators have offered proposals that would reduce deficits by $1 trillion over 10 years, but did not specify how this would be achieved. Biden's fiscal 2024 budget request offered about $3 trillion in deficit reduction over a decade through tax increases in excess of major spending increases.
But Yellen said that the Treasury and Biden will face "very tough choices" if Congress doesn't act to raise the debt ceiling.
"There will be some obligations we will be unable to pay," she said.
The Treasury secretary said payment prioritization is not operationally feasible for the government. "We simply have to raise the debt ceiling," she said.
There is some stress in financial markets over the debt ceiling, with some Treasury bills coming due in early to mid-June trading at higher interests rates, Yellen said, adding that this will likely increase as the early June deadline draws closer.
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