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Yellen Says U.S. Highly Likely to Default on Debt by Early June

The United States is “highly likely” to default on government obligations by early June and potentially as early as June 1 if the Congress fails to raise or suspend the debt limit, said U.S. Treasury Secretary Janet Yellen in an update letter to congressional leaders on Monday.

Yellen gave a similar estimate in another letter one week ago.

Waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States, warned Yellen.

“In fact, we have already seen Treasury’s borrowing costs increase substantially for securities maturing in early June,” added Yellen.

U.S. President Joe Biden and House Speaker Kevin McCarthy are set to meet again on the matter late Monday.

The United States hit its 31.4-trillion-U.S.-dollar debt limit in January and the Department of Treasury employed accounting maneuvers known as “extraordinary measures” to keep the government paying its bills so far.