U.S. Treasury Secretary Janet Yellen on Friday set a deadline for raising the federal debt limit, saying the government would default if Congress does not increase the $31.4 trillion debt ceiling by June 5.
Yellen had previously said a default could potentially happen as early as June 1, but is now characterizing June 5 as the precise deadline.
"We now estimate that Treasury will have insufficient resources to satisfy the government’s obligations if Congress has not raised or suspended the debt limit by June 5," she wrote.
The more precise estimate buys White House and congressional negotiators slightly more time to finalize a deal to raise the statutory ceiling on the federal government's borrowing capacity.
Democratic and Republican negotiators appeared within reach of a deal on Friday but still struggled to resolve thorny differences.
In a letter to Congress, Yellen said her department will make more than $130 billion of scheduled payments in the first two days in June, including to veterans and Social Security and Medicare recipients.
"During the week of June 5, Treasury is scheduled to make an estimated $92 billion of payments and transfers," including a roughly $36 billion quarterly adjustment toward Social Security and Medicare trust funds, Yellen wrote.
"Therefore, our projected resources would be inadequate to satisfy all of these obligations," she said.
Yellen also said the department used an extraordinary cash management measure on Thursday, swapping approximately $2 billion of Treasury securities between the Civil Service Retirement and Disability Fund and the Federal Financing Bank to stave off the potential default date. The measure was last used in 2015, she said.
