During a Sunday appearance on NBC News, Yellen gave her most specific prediction to date as talks between the White House and Congress appear to hit a snag.
“What is the likelihood we can get to the June 15th tax receipts to avoid breaching the debt ceiling? Can you put a percentage on it? Is it 20%, 40%, something like that?” asked “Meet the Press” moderator Chuck Todd.
“There’s always uncertainty about tax receipts and spending,” Yellen replied. “And so it’s hard to be absolutely certain about this, but my assessment is that the odds of reaching June 15th, while being able to pay all of our bills, is quite low.”
Yellen notified Congress last week that she still believes a default could happen as early as June 1. “If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” she warned.
The Treasury Department has been enacting “extraordinary measures” since January, when the United States hit its statutory limit of roughly $31.4 trillion.
“What these involve are taking some funds that are invested in non-marketable government security,” Yellen explained on Sunday. “An example would be the Civil Service Retirement Fund. And first, taking inflows that would normally be invested in non-marketable securities, and leaving it in cash because those securities we would typically issue would count towards the debt ceiling. By leaving it in cash, we conserve room under the debt ceiling to issue a debt to the market.”
Asked about skepticism about the Treasury Department’s forecast, Yellen noted that the Congressional Budget Office also warned of there being a risk that the government will not be able to pay all of its debts at some point during the first two weeks of June without a debt limit solution.
Yellen declined to state an exact date for when a default could happen, instead stressing that her assessment has not changed since last week. June is still the earliest a default could happen, she emphasized.
“I indicated in my last letter to Congress that we expect to be unable to pay all of our bills in early June, and possibly as soon as June 1st. And I will continue to update Congress, but I certainly haven’t changed my assessment,” Yellen said. “So I think that that’s a hard deadline.”
Yellen also refused to divulge what bills the United States might first choose not to pay over others when asked by Todd.
“I would say we’re focused on raising the debt ceiling and there will be hard choices if that doesn’t occur. There can be no acceptable outcomes if the debt ceiling isn’t raised, regardless of what decisions we make,” she said.