Treasury Secretary Janet Yellen revised the projected X-date for the budget ceiling to June 5, pushing back the threat of a default on the nation’s financial obligations for four days.
Yellen updated the prediction on the afternoon of May 26, revising the previous estimate of “early June” given in January and later revised to “potentially as early as June 1.”
The X-date refers to the date when the Treasury will lack the funds to pay all of the nation’s bills on time if Congress does not raise the federal spending limit.
The Treasury must make $258 billion in payments during the first week of June, Yellen said, including benefits for veterans and Social Security recipients, and transfers to the Medicare and Social Security trust funds.
“Therefore, our projected resources would be inadequate to satisfy all of these obligations,” Yellen wrote.
The revised default date provides breathing room for negotiators, who have been meeting intently for two weeks to forge a compromise on the terms for raising the $31.4 trillion borrowing limit.
President Joe Biden has insisted that negotiations are over spending cuts and other provisions of the Limit, Save, Grow Act passed by the House in April, not the debt ceiling itself. He maintains that Congress has a constitutional duty to increase the debt limit in order to preserve the full faith and credit of the United States.
House Speaker Kevin McCarthy (R-Calif.) said beginning in January that Republicans will not raise the debt limit unless Democrats agree to reduce federal discretionary spending in 2024 with no increase in taxes.
The Limit, Save, Grow Act raises the debt limit by $1.5 trillion while lowering federal discretionary spending to the 2022 level, capping annual spending increases at 1 percent for 10 years, strengthening work requirements for some recipients of federal assistance, taking back unspent COVID-19 funds, and easing requirements for permits to drill for oil and gas.
Details of a possible bipartisan agreement were leaked on May 25. The supposed plan would increase the debt limit by $3.5 trillion to $4 trillion and cut spending, according to Rep. Chip Roy (R-Texas), but would not include all Republican demands.
The president said on May 25 that he has offered to cut spending in 2024 and cap spending for two years.
Members of the House Freedom Caucus voiced displeasure with those provisions. They urged McCarthy to insist on all of the provisions of the Limit, Save, Grow Act.
A number of House Democrats have resisted making any cuts to programs that provide benefits Americans depend on, such as Medicaid and the Supplemental Nutrition Assistance Program (SNAP).
Negotiations were ongoing as of late afternoon on May 26. But progress has been slow.
McCarthy told reporters he wants to create an agreement that will “change the trajectory” of the nation’s finances and be “worthy of the American people.”
The president has said he wants to protect the interests of working- and middle-class Americans, and to reduce the deficit by making the wealthiest Americans and big corporations pay their fair share.
“There is forward progress, but each time there’s forward progress, the issues that remain become more difficult and more challenging. So that is step by step, small step by small step, and at some point this thing can come together or go the other way,” Rep. Patrick McHenry (R-N.C.), one of McCarthy’s lead negotiators, told reporters on May 26.
The House is in recess until June 5 but could be called back to consider a bill if needed. The Senate is in recess until May 30.
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