CNN
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The Treasury Department is steadily draining the funds it has to pay the nation’s bills during the debt ceiling impasse.
The Treasury had $57.3 billion in cash on hand Thursday, according to federal data. The amount bounces back as the agency collects revenue and makes payments, but the balance has shrunk from $238.5 billion earlier in the month, when coffers were relatively detached from tax collections in April .
Since the U.S. reached its debt ceiling in January, the Treasury has been forced to rely on cash and emergency measures to pay the bills until Congress tackles the debt ceiling. The agency had about $92 billion left in emergency measures as of Wednesday, down from $220 billion at the end of January.
Treasury Secretary Janet Yellen has repeatedly warned lawmakers that their ability to avoid default could end as soon as June 1. The nation needs to borrow money to make its payments, as its liabilities exceed its income.
It is not known exactly when the nation will reach the so-called X-date, when the US would default for the first time in history. Much depends on how much tax revenue comes in over the next few days and weeks. If it’s lower than expected, as it was for the 2022 tax season collection last month, Yellen could soon run out of track to keep paying bills in full and on time.
The secretary may not know when the nation will default until a day or two in advance, said Ben Harris, who served as the Treasury’s assistant secretary for economic policy until earlier this year.
Take a situation where balances are down to just a few billion dollars: if the Treasury is counting on receiving a certain amount of revenue on a given day to cover payments, but comes up several billion dollars short , could lead to a breach.
“Treasury has guidelines on how much cash is prudent,” Harris said, noting that it’s set at one week’s worth of spending, with a minimum balance of $150 billion. “We’re certainly below that level right now.”
Although Yellen, the Congressional Budget Office and many other forecasters see Date X as likely to come in the first two weeks of June, the Treasury may have enough funds to bring it to the middle of the month.
If that’s the case, it’s likely the government won’t prevail until later in the summer. The agency will receive another injection of funds from estimated second-quarter tax payments, due June 15, and $145 billion in an “extraordinary measure” that will be available later this month .
Although the X-date is potentially just around the corner, White House and House Republican negotiators halted their talks to resolve the debt ceiling impasse for a time on Friday. Negotiations resumed later in the evening on Capitol Hill.
If the nation defaults, it would trigger global economic and financial upheaval. The full consequences are not known because it has never happened before, but many Americans, businesses, and state and local governments are likely to face delays in receiving federal payments, including Social Security benefits Social Security, food stamps and paychecks for federal employees and the military.
“It’s up to the negotiators to look for a resolution in the next few days,” said Rachel Snyderman, senior associate director for economic policy at the Bipartisan Policy Center.
This story has been updated with additional news.
