Asked if the Treasury could meet its debt obligations after June 1 without raising the debt ceiling, McCarthy replied: “Money is always coming in. But I’ll leave that to the Treasury secretary. I’ll take June 1.” June as the deadline, I always have.
Credit ratings agency DBRS Morningstar put the United States under review for a possible downgrade on Thursday, echoing similar warnings from Fitch, Moody’s and Scope Ratings. Another agency, S&P Global, downgraded US debt after a similar situation in 2011.
The standoff, which has lasted for months, has spooked Wall Street, weighing on stocks and raising the cost of borrowing for the country. The yield on Treasury notes due in early June rose on the day, in a sign of investor unease.
Three days
Congress will need several days to approve any deal between the Republican-controlled House of Representatives and the Democratic-majority Senate. Lawmakers regularly need to raise the self-imposed debt limit to cover the cost of spending and tax cuts they have already passed.
Congressmen will have three days to read any debt ceiling bill before having to vote on it. In the Senate, Republican Mike Lee said he would block a quick vote if he didn’t like the deal, which could delay action for days and could push final approval well past June 1.
McCarthy has insisted that any deal must cut discretionary spending next year and limit future spending growth to stem the growth of debt, which now equals the economy’s annual output.
Biden has offered to freeze spending at current levels next year and has proposed several tax hikes to help curb debt.