House Republicans aren’t buying Treasury Secretary Janet Yellen’s warning that the US government will run out of money as soon as June 1, or her dire prediction of a default, diminishing the urgency of raising the debt limit.
“We’d like to see more transparency about how they got to that date,” House Majority Leader Steve Scales told reporters after a closed-door meeting on Tuesday. “It looks like they’re hedging now and opening the door to turning back that history.”
A House Republican, who asked not to be named to speak candidly about his party’s assessment, said he believes the United States should stop paying government salaries first if the Treasury Department exhausts its extraordinary bill-paying measures before Congress allows it to borrow more.
White House Press Secretary Karen Jean-Pierre rejected Republican attempts to downplay the risk of default.
“Everyone understands that the consequences of defaulting for the first time ever will be dire for the American people and the American economy,” Jean-Pierre told reporters at the White House. “It will eliminate up to 8 million jobs, lead to a recession, destroy retirement accounts, raise costs and damage our international reputation.”
Last week, the Treasury Department asked government agencies to ensure they provide “timely and accurate information” to help forecast daily cash flows and debt levels, according to a memo obtained by Bloomberg News.
The Washington Post earlier published the memo and cited people with knowledge who said the department was also asking if there were any payments that could be made at a later time.
Yellen has said repeatedly that the Treasury Department risks not having enough funds to make all payments until the expected wave of tax receipts on June 15.
The Treasury is not alone in its predictions. Congressional Budget Office He said There is a “high risk” of default in the first two weeks of June without a debt deal. The Bipartisan Policy Center said on Tuesday that there is a “high risk” of reaching that point between June 2 and June 13.
Analysts at Goldman Sachs Group Inc. and Wrightson ICAP from June 7-8 as a major risk area. June 8 is the base case for Date X, says Morgan Stanley, when the Treasury runs out of sufficient cash.
That much of the Republican convention ignores the urgency communicated to the White House, corporate executives, and financial markets in the United States is a troubling sign of the negotiations that are taking place. Continue on Tuesday. Representatives of House Republicans and the Biden administration stayed at the Capitol late Monday night and reconvened Tuesday to continue deliberating proposals.
‘I got the money’
Rep. Chip Roy of Texas called the default warnings a “manufactured crisis” to force Republicans to back down on some demands.
“The fact is we will have cash in June,” Roy told reporters on Tuesday. The truth is, we will never default on our debt. This is just completely wrong. We have the money to do that.”
Roy and other conservatives like Matt Gaetz of Florida questioned Yellen’s June 1 appointment as Date X, telling reporters to “ask her about her Ouija board.”
Speaking to reporters Monday night at the Capitol, after returning from the White House, McCarthy insisted the real crisis is unsustainable levels of government spending that must be cut. When asked on Tuesday if he thought June 1 was in fact the deadline for his negotiations with President Joe Biden, McCarthy was noncommittal.
Take McCarthy
“I don’t pick a deadline,” McCarthy said. “Janet Yellen picks the deadline. She sets what it is and I follow what she says.”
For weeks, White House officials have noted that they have publicly stressed the need to quickly extend the debt limit. Last week, Biden canceled planned stops in Papua New Guinea and Australia after the G7 meeting in Japan to return to Washington for negotiations.
Jean-Pierre told reporters on Saturday that Biden himself emphasized the urgency with McCarthy and other congressional leaders before leaving on his trip.
“The president has sat down twice with congressional leaders recently to listen to them, to have a conversation, to talk about his budget, to talk about the urgency of getting the debt cap done and Congress doing their job,” she said.
While major banks and financial institutions Prepare contingency plans In the event of a technical default, the true repercussions for the global economy are yet to be tested.
Jamie Dimon, CEO of JPMorgan Chase & Co, warned earlier this month that going overboard is dangerous, with unpredictable consequences.
Yellen declined to indicate how the Treasury would proceed if it ran out of cash, saying only that “there will be tough choices to be made.”
— With assistance from Ari Natter and Justin Sinek.