by Chris Black
The Treasury was expected to publish its X-date, when the TGA runs out of cash to finance the US government, this week.
What was not expected was how early this day may come.
Yellen:
“After reviewing recent federal tax receipts (fsapps.fiscal.treasury.gov/dts/files/23042800.pdf), our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1.”
CBO (www.cbo.gov/publication/59119):
“…we now estimate that the Treasury will run out of funds in early June… past debt limit impasses have shown that waiting until the last minute (only 12 legislative days remain before June 1 (twitter.com/JakeSherman/status/1653137059832274952)) to increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States.”
A deal will be made, and this may just be Yellen & the CBO’s attempt to pressure Republicans to relent.
The question is whether it takes a 2011-style stock market plunge and credit downgrade first, that’ll prompt Washington into action.
