A recent analysis from the Congressional Budget Office suggests that there is a “significantly greater risk that the Treasury will run out of funds in early June.” That’s at the early end of previous expectations and is due, in part, to lower tax receipts. Similarly, Treasury Secretary Janet Yellen wrote that default could come “potentially as early as June 1” in a letter to Speaker Kevin McCarthy.
In the worst case, if politicians cannot come to an agreement on the debt ceiling this could cause the U.S. government to default. That risks havoc in financial markets. The U.S. came close to default in 2011 and U.S. government debt was downgraded as equity markets sold off.
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