The White House and House Republicans face a dwindling timeline to strike a deal to raise or suspend the debt ceiling before the federal government runs out of cash.
After negotiations briefly derailed last week, President Biden and Speaker Kevin McCarthy (R-Calif.) must finalize a deal this week to ensure enough time to shepherd it through Congress.
Treasury Secretary Janet Yellen warned in a Monday letter to congressional leaders that it was “highly likely” the U.S. will default by early June without action to lift the debt ceiling.
While Yellen has highlighted June 1 as a likely X-date for several weeks, her new and more urgent warning comes barely more than week before an unprecedented and potentially catastrophic default.
“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” Yellen wrote.
The White House and GOP negotiators will need to work through several sticking points, however, before they can reach a deal.
Republicans are pushing to set limits on the government funding levels lawmakers can approve during the appropriations process.
But Democrats and administration officials have fiercely objected, arguing it would yield intolerable cuts to important domestic programs.
The parties have also been divided over bolstering work requirements for welfare programs and the length of a potential debt ceiling deal.