The amount of money that the US government has on hand to pay its bills plummeted by $53 billion, increasing the chances that the government will run out of cash by early June if the debt limit isn’t raised or suspended by then.
The Treasury Department’s cash balance fell to $87 billion on Monday from $140 billion on Friday, partially due to a larger volume of state and local government securities redemptions than anticipated, according to data published Tuesday. The Treasury’s bank account has been under downward pressure recently because of measures being taken to avoid breaching the $31.4 trillion debt cap.
The change in the cash balance was the biggest one-day drop since March 1 and pushes the Treasury’s coffers to a level last seen on April 12, before tax payments briefly replenished it. The expectation was that if revenues were big enough to get the Treasury through an anticipated influx of tax money on June 15 — when some payers have installments due — then it’s also likely to bridge the gap to the next available extraordinary measures on June 30 and stave off default until for at least several more weeks.
Treasury Secretary Janet Yellen reiterated to lawmakers this week that her department’s ability to avoid breaching the statutory debt ceiling via special accounting maneuvers could be exhausted around early June. The window for a resolution of the debt-ceiling standoff is clearly narrowing, with the Treasury saying last week that it had run through all but about $88 billion of its authorized extraordinary measures as of last Wednesday.
Debt-ceiling talks between White House and congressional aides are set to intensify as negotiators seek a framework agreement for Joe Biden and House Speaker Kevin McCarthy to review upon the president’s return from a truncated trip to Asia. The latest round of talks, launched before Biden’s departure Wednesday for a Group of Seven meeting in Hiroshima, Japan, will feature a narrower group of negotiators in hopes of yielding a deal to avert an unprecedented US default.
The president and lawmakers struck a cautiously optimistic tone following a meeting Tuesday, saying that while the two sides remained far apart, they were hopeful the new negotiating teams could find bipartisan middle ground.
