(CNN) The Treasury Department is steadily draining the funds it has to pay the nation’s bills under the debt ceiling.
The Treasury had $57.3 billion in cash on hand as of Thursday, according to federal data. The amount bounces around as the agency takes in revenue and makes payments, but the balance has fallen from $238.5 billion at the beginning of the month, when coffers were relatively flush from April’s tax collection.
Ever since the US reached the debt ceiling in January, the Treasury Department has been forced to rely on cash and extraordinary measures to pay the bills until Congress tackles the debt ceiling. The agency had about $92 billion left in extraordinary measures as of Wednesday, down from about $220 billion at the end of January.
Treasury Secretary Janet Yellen has repeatedly warned lawmakers that her ability to avoid default could end as soon as June 1. The nation must borrow money to make its payments since its liabilities exceed its revenues.
Exactly when the nation will hit the so-called X date, when the US will default for the first time in history, is not known. It largely depends on how much tax revenue comes in over the next few days and weeks. If it’s lower than expected, as it was for the 2022 tax season collections last month, Yellen may soon run out of runway to continue paying bills in full and on time.
The secretary may not know when the nation will default until a day or two before, said Ben Harris, who served as assistant treasury secretary for economic policy until earlier this year.
Take a situation where balances drop to just a few billion dollars: If the Treasury is dependent on receiving a certain amount of revenue on a certain day to cover payments, but is short several billion dollars, that could trigger a default.
“Treasury has guidelines for how much cash is prudent,” Harris said, noting that it’s set at one week’s worth of spending, with a minimum balance of $150 billion. “We’re certainly below that level right now.”
While Yellen, the Congressional Budget Office and several other forecasters peg the X date as likely to hit during the first two weeks of June, it is possible that the Treasury Department will have enough funds to carry it through the middle of the month.
If that is the case, it is likely that the government will not default until later this summer. The agency will get another infusion of funds from estimated second-quarter tax payments, which are due June 15, and from $145 billion in an “extraordinary measure” that will become available at the end of that month.
The conversations stop
Although the X-date is potentially around the corner, Republican negotiators in the White House and the House halted their negotiations to resolve the debt ceiling for a time on Friday. Negotiations resumed later in the evening on Capitol Hill.
If the nation does not default, it will trigger global economic and financial upheaval. The full consequences are not known since it has never happened before, but it is likely that many Americans, businesses and state and local governments will face delays in receiving federal payments, including Social Security benefits, food stamps and paychecks for federal employees and military members.
“The onus is on negotiators to seek a resolution in the coming days,” said Rachel Snyderman, senior associate director for economic policy at the Bipartisan Policy Center.
This story has been updated with further developments.