The political showdown over the nation’s debt ceiling got a bit of a reprieve Friday as U.S. Treasury Secretary Janet Yellen pushed back the “X date” for a potential default to June 5.
Yellen, who had previously set June 1 as the date the federal government could run out of money to pay its debt, said the U.S. has enough reserve funds to operate for at least four additional days, giving lawmakers more time to strike a deal.
“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,” Yellen wrote in a letter to House Speaker Kevin McCarthy.
The outlook for a deal appeared dire when talks stalled midweek and Congress went on break for the Memorial Day weekend, heightening the game of brinkmanship between President Joe Biden and Republican pointman McCarthy. But hopes for progress were buttressed by Yellen’s announcement and reports of a two-year debt deal in the works.
The new “X date” sets up a final push of negotiations next week, with Republicans demanding major spending cuts to raise or suspend the $31.4 trillion US debt cap. The White House has countered with raising taxes on the wealthiest Americans and companies, but neither side has budged despite the looming risk of a default.
The deadline extension and reports of a two-year debt deal in the works was a positive sign on Wall Street, where financial markets saw big gains. The Nasdaq Composite kept its hot streak alive with a 2.17% increase (up 277.59 points), the Dow Jones gained 1.0% (328.69), and the S&P500 climbed 1.3% (54.17).
