The deadline for lifting the federal debt ceiling was established by U.S. Treasury Secretary Janet Yellen on Friday. She stated that if Congress does not raise the $31.4 trillion debt cap by June 5, the nation will default.

Yellen previously stated that a default might occur as early as June 1, but she now describes June 5 as the exact date.

“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,” she wrote.

The more accurate projection gives the White House and congressional negotiators a little more time to come to an agreement to raise the statutory borrowing cap for the federal government.

On Friday, Democratic and Republican negotiators appeared to be close to an agreement but were still having trouble resolving difficult issues.

In a letter to Congress, Yellen stated that her agency will carry out more than $130 billion in planned payments, including those to veterans, beneficiaries of Social Security and Medicare, in the first two days of June.

“During the week of June 5, Treasury is scheduled to make an estimated $92 billion of payments and transfers,” including a roughly $36 billion quarterly adjustment toward Social Security and Medicare trust funds, Yellen wrote.

“Therefore, our projected resources would be inadequate to satisfy all of these obligations,” she said.

Yellen added that the department took an exceptional cash management step on Thursday to delay the potential default date by exchanging around $2 billion in Treasury securities between the Federal Financing Bank and the Civil Service Retirement and Disability Fund. She said the last time the measure was applied was in 2015.

(Adapted from TheEconomicTimes.com)

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