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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.
(Reporting by Rami Ayyub; Additional reporting by Trevor
Hunnicutt; editing by Ismail Shakil, Tim Ahmann and Grant
McCool)
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