Treasury Secretary Janet Yellen said it’s now “highly likely” that her department will run out of sufficient cash in early June, and repeated her warning that the moment could come as soon as June 1.

“I am writing to note that we estimate that it is highly likely that Treasury will no longer be able to satisfy all of the government’s obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1,” Yellen said Monday in a letter to lawmakers.

A week ago, Yellen had said it was “likely” the Treasury would exhaust its special accounting measures to stay within the debt limit by early June.

The newest letter comes as President Joe Biden and Speaker Kevin McCarthy struggle to hammer out a budget deal. Republicans have vowed not to raise the country’s statutory borrowing limit unless Biden agrees to budget cuts.

Negotiators met for more than two hours Sunday evening, and held another session Monday morning, with Biden and McCarthy set to meet later Monday.

Borrowing Costs

Yellen said the Treasury’s timeline estimates are based on currently available data, and she would “continue to update Congress as more information becomes available.”

By May 17, the Treasury had used up all but $92 billion in space created under the debt limit through special accounting measures. As of May 18, the Treasury’s cash stood at $57.3 billion.

Goldman Sachs Group Inc. economists estimated last week the Treasury would reach a key threshold by June 8 or 9, when cash levels drop below the $30 billion minimum that the department is thought to have. Default could happen at any point thereafter, according to the authors.

Yellen warned again in her letter that a default would cause severe damage to financial markets and the US economy. She also reiterated language from last Monday’s letter that “we have already seen Treasury’s borrowing costs increase substantially for securities maturing in early June.”

(Updates with more from letter)