U.S. Treasury Secretary Janet L. Yellen has sent a letter to Congressional leaders, urging them to act promptly to raise or suspend the debt limit. Yellen warned that the Treasury's ability to finance government operations could be exhausted by early June, with the exact date uncertain, but possibly as early as June 1.

Following Yellen's letter, President Biden called congressional leaders, including Speaker McCarthy, Leader Jeffries, Leader Schumer, and Leader McConnell, inviting them to a White House meeting on May 9. White House Press Secretary Karine Jean-Pierre stated that the President is prepared to discuss budget and appropriations processes, but the debt limit extension remains non-negotiable, as the U.S. is not a "deadbeat nation."

In the letter, Yellen emphasized the need for Congress to provide longer-term certainty regarding the government's ability to make payments. As a risk management strategy, the Treasury is suspending the issuance of State and Local Government Series (SLGS) Treasury securities, which count against the debt limit. This action, however, could negatively impact state and local governments by depriving them of a crucial financial management tool.

Yellen cautioned that delaying action on the debt limit could harm business and consumer confidence, increase short-term borrowing costs for taxpayers, and negatively affect the U.S. credit rating. Failure to address the debt limit might result in significant hardship for American families, weaken the country's global leadership position, and raise national security concerns.