There’s been speculation for months about when, exactly, the U.S. government would default without Congress addressing the debt ceiling. In some circles, it’s become known as the “x date”: the point at which the Treasury Department exhausts its ongoing efforts and the economic catastrophe begins in earnest.
It was against this backdrop that Treasury Secretary Janet Yellen raised a few eyebrows yesterday afternoon. NBC News reported:
Treasury Secretary Janet Yellen said Monday that the deadline to extend the debt ceiling or face the first U.S. default could be as early as June 1, adjusting the timeline as the path to avert a self-inflicted crisis remains murky on Capitol Hill.
I’ve seen some headlines suggesting the Treasury secretary told lawmakers that June 1 is the new “drop-dead date.” That’s not quite what happened.
After reviewing recent federal tax receipts, 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, if Congress does not raise or suspend the debt limit before that time,” Yellen wrote in yesterday’s letter.
The cabinet secretary, pointing to “inherently variable” federal receipts and outlays, added that the actual deadline could slide to “a number of weeks later.”
All of which is to say, Yellen is letting lawmakers know they have to get their act together by next month — or else.
My general impression of the conventional wisdom is that most observers believe cooler heads will prevail, and the relevant players will somehow work something out before it’s too late. We’ve been here before — this is not, alas, the first time radicalized Republicans have played games with the full faith and credit of the United States — but the nation has never defaulted before. Some kind of solution, the assumption goes, will come together before the x-date.
It’s probably time to start adjusting those expectations.
To be sure, I hope the…
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