Disappointing Revenue Totals Could Speed Up Default Threat
Author: Greg Valliere
April 20, 2023
OUR COLLEAGUE ANDY KOCHAR reported last night that only $108 billion in receipts came in earlier this week, “far lower than expectations” which may move the default date “up to June at a bare minimum.”
MOST ANALYSTS HAD BELIEVED — OR HOPED — THAT THERE WOULD BE ENOUGH CASH to keep the government running through June 15, when some payers have installment payments due. But analysts like Kochar are now warning that the government might not even make it to June 15.
TREASURY OFFICIALS ARE SCRAMBLING to avoid the $31.4 trillion debt ceiling cap; available funds last week dwindled to as little as $86.55 billion, according to Bloomberg.
THIS OMINOUS NEWS ABOUT CASH ON HAND comes as budget negotiations stall on Capitol Hill. House Speaker Kevin McCarthy has a vague plan to reduce red ink, but it’s unclear whether it can pass in the narrowly divided House — and prospects are even dimmer in the Senate.
WE’VE TALKED WITH DEMOCRATS this week who are in no rush to move legislation that would slash Biden Administration spending programs. In fact, some Democrats are content to let this crisis drag on until late summer, which would give them a club to use against Republicans for several months. “We want to portray them as irresponsible on the default threat,” one Democrat told us.
BUT THE OPPORTUNITY for a summer-long slugfest may hit a brick wall in the next two months — a debt crisis that could arrive far earlier than analysts anticipated just a week ago.
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