The U.S. government will start defaulting on its repayment obligations between early June and early August unless the federal debt limit is lifted, the Bipartisan Policy Center think tank said Tuesday, signaling pressure from a decline in tax revenues.
The starting period of the centrist institute’s latest estimate for the so-called “X day” – when the government runs out of money to pay its obligations – lines up with that of US Treasury Secretary Janet Yellen, who warned last week that a default could occur as early as June 1st
The Bipartisan Policy Center (BPC), which closely monitors debt limit disputes in Congress, estimated in February that Date X could occur sometime in the summer or early fall in the US, but now sees a much closer default. the $31.4 trillion lending limit.
In its latest analysis, the BPC said weak revenues during the tax filing season were exacerbated by late payments allowed to taxpayers in some areas hit by severe storms, including large parts of California and some counties in Georgia and of Alabama, increasing the possibility of a liquidity shortage in early June.
“The coming weeks are critical to assess the strength of the government’s cash flows,” said Shai Akabas, director of economic policy at the BPC. “If a solution is not reached before June, politicians could be left playing Russian roulette on a daily basis with all the trust and credit of the United States, risking financial disaster for its constituents and the country.”
Source: Terra
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