Treasury Secretary Janet Yellen on Monday warned that the United States could run out of cash and default on its debt repayments as early as June 1, should the government fail to raise the debt limit.
"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," Yellen said in a letter to House Speaker McCarthy.
The June 1 warning is earlier than some on Wall Street had expected, with late July previously touted as a potential deadline.
“We maintain our base case that the debt limit deadline will be in late July, now with increased confidence as revenues are once again close to our projections,” Goldman Sachs said in a note last week.
Efforts to find a resolution to raise the debt ceiling have been held up by political wrangling. President Joe Biden has made it clear that he won't back any debt ceiling legislation that includes sizable cuts to domestic programs.
Last week, House Republicans narrowly passed a bill, known as the Limit, Save, Grow Act, that seeks to raise the debt ceiling, but cut federal government spending.