State officials ask Yellen for clarity on what will happen if debt bill doesn’t pass by June 5

Top financial officers from 20 different states Wednesday wrote to Treasury Department Secretary Janet Yellen seeking clarity on what fallout to expect if lawmakers fail to raise the debt ceiling in time and cause the U.S. to default.

“As state financial officers, not only are we investors in and holders of federal debt, but we are also responsible for safeguarding the adequacy of state funds to ensure the ability to provide necessary public services without interruption,” the financial officers wrote in the letter, which was obtained first by The Hill.

The officers noted that while there is a budget agreement and legislative text for a bill that would raise the debt ceiling for two years, it still must pass through Congress and get to President Biden’s desk before June 5, which is when Yellen has warned that the Treasury Department will no longer be able to meet its obligations.

“The administration’s public comments have implied that past this date there are only two alternatives — an extension of the debt ceiling or a default on the nation’s debt,” the officers wrote. “As financial officers ourselves, we are aware that this is a false choice. In the event you are unable to meet all of the government’s spending obligations, there are a number of options before you with respect to prioritization of payments.”

The officers asked for clarity, specifically asking Yellen what the Treasury Department plans to do to ensure no government default on debt occurs, as well as a “detailed explanation for the date the department expects to cease extraordinary measures.”

The letter is signed by 22 officials representing 20 states: Alabama, Alaska, Arizona, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, Nevada, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Texas, Utah and West Virginia.

The officials sent the letter the same day the House is expected to vote on legislation that would raise the debt ceiling after Biden and Speaker Kevin McCarthy (R-Calif.) finalized an agreement over the weekend. 

Several conservative Republicans and progressive Democrats have signaled they will oppose the bill, but it only needs a simple majority to pass the House.