Without a consensus from U.S. authorities to raise the national debt limit, the Treasury Department faces a narrowing cash runway, with cash on hand projected to be insufficient to meet federal obligations around June 8 or 9. This outlook comes as analysts from Goldman Sachs—one of the nation’s largest investment banks—forecast the Treasury could hit that crunch point unless lawmakers approve an increase in the debt ceiling. Bloomberg summarizes these expectations, highlighting how a ceiling breach or delay in action would strain the government’s ability to cover upcoming payments.
Economists estimate the probability of reaching a political agreement this week remains modest, around 30 percent. The current debt limit of $31.4 trillion has been surpassed since January 2023, and while some observers wait to see whether a compromise could be brokered before the deadline, the Treasury’s cash balance has already begun to dwindle rapidly. The shrinking balance underscores the risk to daily operations if financing gaps emerge between incoming revenues and periodic federal outlays.
Officials warn that the Treasury, if left without a debt limit increase, could exhaust cash to fund ongoing government obligations. A recent trajectory shows the cash balance fluctuating, with any unplanned revenue shortfalls potentially accelerating pressure on liquidity. In the most recent week, the Treasury’s cash reserves moved modestly, reflecting the volatile interplay between receipts and the timing of payments and debt issuance. These fluctuations complicate the government’s ability to meet several entrenched commitments without additional borrowing capacity.
Earlier in the month, discussions intensified: Speaker of the House Kevin McCarthy signaled a meeting with President Joe Biden to address the debt ceiling, while Treasury Secretary Janet Yellen reiterated that decisive action would be required if the ceiling is not raised. The ongoing debate centers on balancing fiscal responsibility with the need to maintain uninterrupted funding for essential programs and services. These conversations are taking place against a backdrop of broader economic considerations, including forecasts for receipts, spending commitments, and inflation dynamics, which together shape the urgency of a timely resolution.