Biden calls meeting amid fears US to run short of cash
The US Treasury has warned it could soon run short of cash to pay all of the government's bills without a debt limit increase, prompting President Joe Biden to summon the top four congressional leaders to the White House to try to avert a fiscal crisis.
A person familiar with the plans told Reuters Biden called Republican House Speaker Kevin McCarthy in Jerusalem, as well as House Democratic leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Republican leader Mitch McConnell, and invited them to a meeting on May 9 to talk about the debt ceiling and federal spending.
US Treasury Secretary Janet Yellen said in a letter to Congress the agency will be unlikely to meet all US government payment obligations "by early June, and potentially as early as June 1" without action by Congress.
The new potential "X-date", which takes into account April tax receipts, is largely unchanged from a previous estimate, issued in January, that the government could run short of cash about June 5.
But Yellen also added some wiggle room.
"Federal receipts and outlays are inherently variable, and the actual date that Treasury exhausts extraordinary measures could be a number of weeks later than these estimates," she wrote to representatives.
"It is impossible to predict with certainty the exact date when Treasury will be unable to pay the government's bills, and I will continue to update Congress in the coming weeks as more information becomes available," she wrote, urging Congress to act quickly to raise the limit.
After hitting the $US31.4 ($A47.4) trillion borrowing cap on January 19, Yellen previously told Congress Treasury would keep up payments on debt, and federal benefits and make other outlays using cash receipts and extraordinary cash management measures.
In 2011, a similar debt ceiling fight took the country to the brink of default and prompted a downgrade of the country's top-notch credit rating.
This time, negotiations might be even more difficult, veterans of 2011's face-off say.
The Republican-led House of Representatives passed a bill on April 26 that would raise the debt ceiling in exchange for deep cuts to health care for the poor and other budget cuts that the Department of Transportation says would shut hundreds of air traffic control towers.
The bill also would slash tax incentives for solar and other climate-friendly energy sources.
The Republican bill would implement $US4.5 ($A6.8) trillion in spending cuts - or about 22 per cent - in exchange for a $US1.5 ($A2.3) trillion increase in the US debt limit.
It has no chance of passing the Democrat-controlled Senate and the White House has said President Joe Biden would veto the legislation.
The White House has asked Congress to raise the debt limit without conditions; administration officials are already making plans to negotiate with Republicans over the president's 2024 budget plan.
The US's debt ceiling battles are likely to persist for years to come, with benefit programs such as Social Security and Medicare accounting for the largest category of the budget and projected to grow dramatically as the population ages.