Still no decision on Nation’s Debt Limit; Experts warning of Economic Crisis as soon as June 1st

The Bipartisan Policy Center's latest projection follows Treasury Secretary Janet Yellen's warning that the nation could run out of money as soon as June 1. | Alex Wong/Getty Images

Revelations 13:16-18 “Also it causes all, both small and great, both rich and poor, both free and slave, to be marked on the right hand or the forehead, so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name. This calls for wisdom: let the one who has understanding calculate the number of the beast, for it is the number of a man, and his number is 666.”

Important Takeaways:

  • Here’s who misses checks if the U.S. hits the debt brink in June
  • Its latest dire projection — delivered hours before President Joe Biden and congressional leaders meet at the White House — follows Treasury Secretary Janet Yellen’s warning last week that the nation could run out of money as soon as June 1, dramatically shortening the timeline for lawmakers to lift the borrowing cap even as the two parties remain deeply at odds over how.
  • While it’s far from certain how, exactly, the Treasury Department would handle a default — including whether it would prioritize certain payments or delay paying the government’s bills — the think tank noted that about $50 billion in Social Security benefits are set to go out in the first half of June, in addition to more than $20 billion in payments to Medicaid providers, $6 billion in federal salaries, $12 billion in veterans benefits and $1 billion in SNAP benefits, also known as food stamps.
  • The distress signals from government and outside forecasters have done nothing to jumpstart talks between the White House, which is insisting on a “clean” debt limit increase, and Republicans, who are demanding spending cuts in exchange for lifting the borrowing cap. The Biden administration has refused to negotiate, vowing to keep government funding on a separate track.
  • A number of Republicans aren’t feeling the pressure either, viewing Yellen’s early June projection as nothing more than a political ploy aimed at squeezing the GOP to swallow a clean debt hike. Akabas said Yellen’s warning is consistent with how the Bipartisan Policy Center is analyzing the situation, however, noting that “no risk is too small a risk to flag.”
  • Pressure from the markets is what may ultimately force action, Zandi said.
  • “I don’t think lawmakers will act until they’re pushed to act by the stock market and the bond market saying, ‘If you guys don’t, this is what’s going to happen’,” Zandi said. “There’s going to be a lot of red on the screen, a lot of 401Ks are going to be diminished and there’s going to be a lot of angry people.”

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