Janet Yellen And The Treasury Are Running Out Of Options

On May 15th, Treasury Secretary Janet Yellen sent a letter to House Speaker Kevin McCarthy reiterating the need for Congress to raise the debt ceiling so that the Treasury can continue to finance the government’s operations.

She stated that as early as June 1 the Treasury would no longer be able to satisfy the government’s obligations.

It was on January 19, 2023 that Secretary Yellen informed the House Speaker that the United States government hit its statutory debt limit of $31.4 trillion and would have to begin taking extraordinary measures to prevent the United States government from defaulting on its obligations.

For almost six months, Secretary Yellen has been moving money from one pile to another. She has:

• Suspended reinvestment in the Civil Service Retirement and Disability Fund.
• Suspended reinvestment in the Postal Service Retiree Health Benefits Fund.
• Suspended reinvestment of government securities in the Federal Employees Retirement System Thrift Savings Plan.
• Suspended issuance of State and Local government Series Treasury Securities.

With less than two weeks to go, the Treasury is running out of options.

Yesterday, it was reported that the Treasury General Account stood at $68.3 billion, its lowest level since September 2017 when the debt ceiling was suspended during another debt ceiling crisis. When Yellen began employing extraordinary measures in January, the Treasury General Account was $576.2 billion.

The Treasury General Account is the Treasury’s checking account at the Fed, from which it pays all of its bills. It had a slight increase in April as tax receipts came in, but for the past three weeks, they have had a weekly burn rate of $76 billion.

As the politicians dawdle with this political football, reality has set in.

It should not have to be stated that the obligations the Treasury must pay for have already been approved by Congress. It is simply irresponsible of our elected leaders to refuse to meet their obligations for political gain, in my view.

As Yellen stated in her letter, “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.”

The time is now!