Two new analyses are backing Treasury Secretary Janet Yellen’s forecast that the nation could default on its debt – and unleash economic chaos – as soon as early June if Congress doesn’t act.
The projections, which are roughly in line with those issued last week by Yellen and the Congressional Budget Office, add to the pressure on House Republicans and President Joe Biden, who may have only a few weeks to hammer out their vast differences over addressing the debt ceiling. Biden is meeting with congressional leaders Tuesday to work on a deal, the first movement in months.
A weaker-than-expected tax season, spurred in part by disaster-related filing extensions for much of California and parts of Alabama and Georgia, has increased the odds that Treasury won’t have enough funds to pay the federal government’s bills in early June, according to an updated estimate released Tuesday by the Bipartisan Policy Center.
“The coming weeks are critical for assessing the strength of government cash flows,” said Shai Akabas, the center’s director of economic policy. “If a solution is not reached before June, policymakers may be playing daily Russian roulette with the full faith and credit of the United States, risking financial disaster for their constituents and the country.”
The so-called X-date, when the US could default, could arrive between early June and early August, according to the center. In February, it projected the default could take place during the summer or early fall.
Meanwhile, Moody’s Analytics last week pegged the default date at June 8, significantly earlier than its prior projection of August 18. But the X-date could hit as soon as June 1 or as late as early August, according to that analysis.
Cumulative income tax receipts are tracking more than 30% below collections a year ago, in part because of weaker capital…
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