President Joe Biden has invited congressional leaders from both parties to the White House next week to discuss the debt ceiling as Treasury Secretary Janet L. Yellen cautioned that the government could run out of funds to pay its bills on June 1.
"After reviewing recent federal tax receipts, 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, if Congress does not raise or suspend the debt limit before that time," Ms. Yellen said Monday in a letter to congressional leaders.
She added that it's "impossible to predict with certainty the exact date when Treasury will be unable to pay the government's bills," and urged lawmakers to raise or suspend the debt ceiling as soon as possible.
Mr. Biden invited Senate Majority Leader Chuck Schumer, D-N.Y.; Senate Minority Leader Mitch McConnell, R-Ky.; House Speaker Kevin McCarthy, R-Calif.; and House Minority Leader Hakeem Jeffries, D-N.Y, for a May 9 meeting at the White House to hash things out.
The debt limit or debt ceiling — the terms are used interchangeably — is a cap on the money the U.S. government can borrow to pay its bills. It does not authorize any new spending, but it allows the Treasury Department to finance the existing legal obligations already approved by Congress. The debt limit was last raised in December 2021 and stands at $31.4 trillion.
The U.S. has never failed to raise or suspend the debt ceiling, which Ms. Yellen has said would cause "an economic and financial catastrophe." But congressional Republicans have said they will not pass a debt ceiling bill without some cuts to government spending.
House Republicans on April 26 passed the Limit, Save, Grow Act of 2023, which would raise the debt ceiling by $1.5 trillion or until March 31, whichever comes first, and cut discretionary spending to fiscal year 2022 levels and then limit the growth of spending to 1% per year. It would also nix the Inflation Reduction Act's tax credits for renewable energies, eliminate Mr. Biden's student debt relief initiative and expand work requirements for Medicaid and other social welfare programs.
The bill will not pass in the Senate, Mr. Schumer said Monday, and would face a certain veto from Mr. Biden.
The White House has not changed its position and said it will not negotiate around the debt ceiling.
In a speech on the Senate floor Monday, Mr. Schumer likened the House Republican's bill to a ransom note. "As we expose this terrible bill for what it is, Senate Democrats' position remains the same: the only real solution is for both parties to pass a clean bill to avoid default with no brinksmanship, no hostage-taking," Mr. Schumer said.
Patrick McHenry, R-N.C., chairman of the House Financial Services Committee, said in a statement that it's past time for Mr. Biden "to join House Republicans at the adult table and negotiate to avoid a default."
He added, "Last week, under the leadership of Speaker McCarthy, House Republicans became the only people in Washington to actually take action to raise the debt limit. Senator Schumer has done nothing. It's telling that the White House is so confident in their position, yet the Senate has not voted on a so-called clean debt limit increase."