May 2, 2023—U.S. Treasury Secretary Janet Yellen warned congressional leaders on Monday the federal government might have trouble paying its bills beginning in early June if Congress can’t come together on terms for increasing the debt limit.
The U.S. government breached the $31.381 trillion limit on amassing debt in January. Ever since the federal government has been resorting to extraordinary measures to get by. As of April 28, the U.S. federal debt stood at $31.45 trillion.
State And Local Governments First To Feel The Pinch
In a letter to Congress on May 1 Yellen said state and local governments are the first to feel the pinch. Today, Treasury stopped issuing securities known as State and Local Government Series (SLGS) that help states and local governments comply with tax regulations.
Now, seven associations representing state and local governments are urging Congress to act swiftly on both the debt limit and the national debt. Six of them joined a February letter written by the National Governors Association.
“We call on Congress to increase or suspend the debt limit as soon as possible,” the letter said. “And we call on both the Administration and Congress to consider serious long-term reforms that will reduce the national debt and put the country on more sustainable fiscal footing. States and territories succeed when there is certainty and stability in federal resources.”
Separate Bills in Congress
The Republican-led House passed a bill, H.R. 2811, on April 26, 2023. It includes an authorization for increasing the statutory limit on accumulating debt by $1.5 trillion. That’s estimated to fund U.S. obligations through March 31, 2024. The bill includes cuts to tax subsidies for energy-efficient products, spending cuts, a reversal of President Biden’s student loan forgiveness, and other measures. It passed the House on a 217-215 partisan vote.
Today, House Democrats tried to force a separate bill, “The Breaking the Gridlock Act.”
Meanwhile, President Joe Biden extended an invitation to congressional leaders to meet at the White House May 9.
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