The Treasury Department’s measures to help keep the government’s bills paid have declined to $88 billion from $110 billion just a week ago.
The department said in a recent statement that just over a quarter of the $333 billion of authorized measures are still available to keep the government from reaching the statutory debt limit.
Earlier this month, Treasury Secretary Janet Yellen said that the government is at risk of running out of headroom as soon as June 1 and that the department may not be able to meet the government’s obligation.
Yellen said that treasury markets have shifted to price in a default premium for securities maturing around that date. However, she has expressed hope that a solution will soon be reached.
“It’s certainly not a positive for relationships and standing in the world and credibility,” Yellen reportedly told Reuters on the sidelines of the meeting of finance officials of G-7 nations in Japan.
A meeting between President Joe Biden and Speaker Kevin McCarthy on the debt impasse didn’t offer any optimism, and the leaders are scheduled to meet again next week.
The government’s primary source of revenue is taxes, and money coming from it needs to be more to cover all of the government’s spending.
Almost every year since the U.S. was founded, the country has been running in a federal deficit. To make up for it, the government has had to borrow money. It has done so by issuing bonds that investors can purchase and exchange for the same money with interest. For the fiscal year 2023, the government has a deficit of $1.10 trillion. As a result, the Treasury Department sells bonds to finance its deficit.
According to a report from the New York Times, one Goldman Sachs chief economist earlier said that failing to pay government salaries, bondholders or social security recipients would reduce the U.S. economy by 10%, as a large amount of spending power would be halted overnight.
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