By LISA MASCARO, SEUNG MIN KIM and KEVIN FREKING (Associated Press)

WASHINGTON (AP) —

Treasury Secretary Janet Yellen said Friday the projected debt ceiling deadline is extended to June 5, later than previously estimated.

Yellen said in a letter to Congress that inaction on raising the borrowing limit would “cause severe hardship.”

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

WASHINGTON (AP) — House Speaker Kevin McCarthy and his Republican debt negotiators hit “crunch” time Friday at the Capitol, straining to wrap up an agreement with President Joe Biden to curb federal spending and lift the nation’s borrowing limit ahead of a fast-coming deadline.

They hope to end weeks of frustrating talks and strike a deal by this weekend. Treasury says the government could start running out of money as soon as next Thursday, sending the U.S. into a potentially catastrophic default with economic spillover around the world.

Anxious retirees and social service groups were among those making default contingency plans as lawmakers left town for the long holiday weekend. The next batch of Social Security checks are due to go out next week.

“The world is watching,” said International Monetary Fund Managing Director Kristalina Georgieva after meeting Friday with Treasury Secretary Janet Yellen. “Let’s remember we are now in the 12th hour.”

Democrat Biden and the Republican speaker were narrowing differences, laboring to lock in details on a two-year agreement that would restrain federal spending and lift the legal borrowing limit past next year’s presidential election.

Any deal would need to be a political compromise, with support from both Democrats and Republicans to pass the divided Congress.

“We know it’s a crunch,” McCarthy said as he arrived at the emptied out Capitol, acknowledging more progress needed to be made.

In remarks at the White House honoring the Louisiana State University champion women’s basketball team, Biden gave a shoutout to one of this top negotiators saying she’s “putting together a deal, hopefully.”

He was referring to Office of Management and Budget Director Shalanda Young who attended the event as did Rep. Garret Graves of Louisiana, a top Republican negotiator.

While the contours of the deal have been taking shape to cut spending for 2024 and impose a 1% cap on spending growth for 2025, the two sides remain stuck on various provisions. The debt ceiling, now at $31 trillion, would be lifted for two years to pay the nation’s incurred bills.

A person familiar with the talks said the …read more

Source:: The Mercury News

      

Debt ceiling deadline is extended to June 5, later than previously estimated, Yellen says

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