U.S. Treasury Secretary Janet Yellen, in a closed-door meeting Thursday with a major banking group, warned that the June 1 deadline to raise the country’s $31.6 trillion debt ceiling is a real cutoff, Axios reports.

The U.S. will run out of money as of that date, Yellen told the Bank Policy Institute, a person in the room said.

The fallout will be catastrophic, Yellen cautioned, repeating earlier warnings of a recession, bank runs, fire sales and financial market meltdowns worldwide. Yellen told the bankers that private forecasters have confirmed her June 1 deadline as the date when the U.S. will become unable to pay its bills.

Borrowing costs are already getting higher, Yellen told the Wall Street group, who, Biden officials are privately complaining, have failed to use their influence to break the debt ceiling stalemate.

House Speaker Kevin McCarthy, R-Calif., said Thursday he sees a "path" forward on a debt deal with Democrats and that the House could vote on one as soon as next week.

However, a group of 11 Senate Democrats led by Sen. Bernie Sanders, I-Vt., say it is “impossible” for Democrats to reach a deal with Republicans.

In a letter to President Biden Thursday urging him to exercise his powers under the 14^th Amendment to raise the debt ceiling, the senators said, “We cannot reach a budget agreement that increases the suffering of millions of Americans. [It is] “seemingly impossible to enact a bipartisan budget deal at this time.”

Before leaving for the G-7 summit in Japan, Biden weighed in on the crisis, saying, “It would be catastrophic for the American economy and the American people if we didn’t pay our bills.”

Progressive lawmakers are unconvinced the talks are getting anywhere, and a group of House conservative want to end the negotiations, saying the debt ceiling bill the House of Representatives passed last month should be their last best offer.

While Democrats have been calling for Biden to invoke the 14^th Amendment, Biden officials privately worry that if the president circumvents Congress, it could trigger a stock market selloff and even judicial scrutiny.


 

• McCarthy Sees 'Path Forward' on Debt Ceiling Deal
• Yellen: US Default Would Cause 'Worldwide Panic, Runs'
• Yellen Calling CEOs Personally to Warn on Debt Ceiling