According to a forecast by Goldman Sachs, unless the debt ceiling is raised, the Treasury Department would run out of cash to cover the federal government’s commitments by June 8 or 9.
Since January of this year, when the United States debt reached $31.4 trillion, the Treasury has been taking “extraordinary measures,” which are accounting tricks involving the transfer of money between accounts, to meet the country’s debt obligations. Once the balances in those accounts drop below $30 billion, Treasury will no longer be able to employ exceptional measures to meet the federal government’s obligations.
If the Goldman Sachs note’s estimate of June 8 or 9 holds, lawmakers may have more time to finalize a deal than initially anticipated.
Economists at Goldman Sachs saw that the Treasury’s cash position dropped to trim over $57 billion last Thursday from around $92 billion the day before. The Treasury’s cash balances rise and fall daily in response to changes in tax revenues and changes in spending as federal bills come due, but these extreme measures can’t last forever.
After weeks of stagnation, negotiations between President Biden and House Speaker Kevin McCarthy, R-Calif., have picked up steam to avert the looming prospect of default.
Democrats have been hesitant to agree to budget cuts, while House Republicans have been pushing for an agreement that includes spending limitations, especially on non-defense discretionary expenditures.
On Monday, when the president returns from a trip to Japan for the G-7 that was cut short owing to the condition of discussions, Biden and McCarthy will meet, while officials from both sides will gather on Sunday night to prepare for the meeting.
McCarthy has said that a compromise in principle should be achieved this weekend to give Congress enough time to transform the agreement into legal text and pass the bill through the House and Senate before the June 1 deadline.