The IRS brought in less taxes than expected this year, and the Treasury says it may run out of funds as early as June 1.
Treasury Secretary Janet Yellen has sent a letter to Congress warning that the Treasury is running out of ways to stall as the U.S. debt limit approaches."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," Yellen wrote.
Because federal costs are"variable," Yellen wrote the Treasury may have enough reserves to keep up payments for a few weeks more than the worst case scenario. The treasury has already taken a set of"extraordinary measures" to buy time, including pausing investment in retirement funds for postal workers and other federal employees; and pausing U.S. dollar investment in the Exchange Stabilization Fund, which the government uses to buy and sell foreign currencies.Monday, Yellen said the Treasury is also pausing certain securities that it issues to states and cities.
Yellen told Congress it needs to act as quickly as possible not just to protect the consumer economy, but also to make sure the U.S. doesn't risk default or a major recession. "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," she wrote.
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