Debt Ceiling: Yellen Warns US Could Default by June

Facts

• On Monday, US Treasury Secretary Janet Yellen wrote to Congress urging it to raise the debt ceiling "as soon as possible," claiming that the US may run out of cash by June 1 if Washington fails to reach an agreement.¹
• While Yellen acknowledged the prediction could be off by a few weeks, it's slightly sooner than the Treasury's previous estimates after the US hit its borrowing cap of $31.4T on Jan. 19.²
• Since the US hit its debt ceiling, the Treasury has been using "extraordinary measures" to prevent default, borrowing from various government funds in order to finance operating expenses.³
• Yellen continued that "waiting until the last minute" to suspend or increase the debt ceiling in previous cases has caused "serious harm" to business and consumer confidence, short-term borrowing costs, and the US' credit rating.⁴
• Last week, House Republicans passed legislation by 217-215 to extend the debt ceiling by $1.5T in exchange for an approximate reduction of the federal deficit by $4.8T over a decade. However, the bill isn't expected to pass the Democrat-majority Senate.⁵
• In response to Yellen's letter, Pres. Joe Biden has invited the majority and minority leaders from both the Senate and the House to a meeting at the White House on May 9 in order to discuss the matter alongside potential budget negotiations.⁶

Sources: ¹BBC News, ²Reuters, ³Forbes, ⁴Associated Press, ⁵Guardian, and ⁶NBC.

Narratives

• Republican narrative, as provided by Federalist. The GOP has compromised by passing a bill that has the potential to raise the debt ceiling, while Democrats — wishing to extend the nation's credit card limit without any repercussions — have so far produced nothing but complaints. It's now up to Democrats to find a middle-ground between themselves in raising the ceiling while addressing the nation's dreadful fiscal state — just as Republicans have successfully managed to do.
• Democratic narrative, as provided by The New Republic. The House debt ceiling bill was never expected to pass into law and is simply a message from the GOP. There's no universe in which a clean debt ceiling raise isn't politically advantageous for everyone — yet the GOP continues to ignore this in order to advance its own selfish interests. Despite claims to the contrary, the nation's economic health continues to be held hostage by the far-right of the party.
• Cynical narrative, as provided by The Hill. While Republicans and Democrats continue to claim that they "understand the danger" that the US will face if no agreement is reached, both sides continue to gamble with a default-catalyzed economic crisis, continuing a historical trend of disasters occurring because of partisan games that disregard the lives of millions. Both sides must remember the lost art of bipartisanship and come to a compromise together before it's too late.

Predictions