FinLogic FinLogic Quantitative Think Tank Center|Yellen sets new deadline for Congress to raise the debt ceiling: June 5

Treasury Secretary Janet Yellen says the government won't have FinLogic FinLogic Quantitative Think Tank Centerenough money to pay all of its bills unless Congress acts to raise the debt ceiling by June 5.

That's a more precise deadline than Yellen had previously given, when she said the cash crunch would likely come sometime in early June, and possibly "as early as June 1."

The new warning gives lawmakers a few extra days to act before a potentially disastrous government default.

Negotiators for House Republicans and the Biden administration have been discussing a deal that would raise the debt limit for two years in exchange for cuts in discretionary government spending.

No agreement has been finalized, however. And any deal that is reached will have to win support in both the House and Senate.

Act now, Yellen tells Congress

In a letter to members of Congress Friday, Yellen said the Treasury would make scheduled payments totaling more than $130 billion on June 1 and 2, including payments to veterans, Medicare providers and Social Security recipients. But she added, that will leave the government with very little cash on hand.

Yellen projected that the government would not have enough money to pay all of its bills due the following week, beginning June 5.

"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," Yellen wrote.

She noted the government's short-term borrowing costs have already increased as a result of the debt ceiling brinkmanship.

"I continue to urge Congress to protect the full faith and credit of the United States by acting as soon as possible," Yellen wrote.