The US Treasury Department has burned through an unprecedented $286 billion in cash reserves over the past month, leaving just $280 billion for essential programs and government operations.
This historic rate of spending signals a growing concern among lawmakers that the country may be on the brink of defaulting on its national debt. The current debt ceiling of $36.1 trillion has been breached by the US’s current $36.6 trillion in liabilities, forcing the government to draw down on available funds.
Treasury Secretary Scott Bessent warned lawmakers in March that the Treasury General Account is dwindling at an alarming rate. With just $280 billion left, even essential spending programs like Social Security and Medicare would face significant shortfalls if not for temporary borrowing measures.
The consequences of a default are dire, with former Treasury Secretary Janet Yellen warning that it would be “catastrophic” for the US and global economy. A recession, higher interest rates, and plunging retirement accounts are among the potential outcomes.
To forestall this crisis, consensus is growing that raising the debt ceiling once again is necessary. Senate Majority Leader John Thune is reportedly open to increasing the limit by $4 trillion, while House budget plans include $4.5 trillion in tax cuts. However, negotiations will be complicated due to GOP senators’ and House Republicans’ opposition to raising the debt limit.
With the Treasury’s coffers dwindling further, lawmakers must navigate a complex web of spending priorities and party divisions to avoid defaulting on the national debt. The clock is ticking for a resolution before temporary borrowing measures expire in August or September.
Source: https://www.dailymail.co.uk/yourmoney/article-14552091/us-treasury-burned-billions-cash-balance.html