The country’s X-date — when the government is projected to run out of money to pay its debts — could come as early as June 1, according to Treasury Secretary Janet Yellen, while Goldman Sachs and Moody’s Analytics estimate that the ceiling could be hit around June 8.
President Joe Biden and House Speaker Kevin McCarthy will meet face to face today after a weekend of on again, off again negotiations over raising the nation’s debt ceiling and mere days before the government could reach a “hard deadline” and run out of cash to pay its bills. (The House controls government spending – not the White House)
Apparently, even a short default could mean nearly a million Americans losing their jobs, and the country sliding into a mild recession, according to Moody’s Analytics. A breach would also hit Americans in their wallets: A Joint Economic Committee analysis previously found that failure to lift the debt ceiling could cost workers $20,000 in retirement savings.
But the hard fact is that we’re heavily in debt because our spending is out of control. If $35 million could go to Ukraine this week, the crisis is not perceived as real by the Administration. McCarthy must force hard decisions from the White House and Congress.
House Rs passed a bill that makes responsible spending reforms & raises the debt limit. Biden & Schumer are well aware of the alarming numbers, yet their position remains the same: don’t change a thing. Is anyone else tired of the same old gamesmanship from D career pols? pic.twitter.com/Tk5sUbZ1tm
— Citizens United (@Citizens_United) May 22, 2023
Treasury Secretary Janet Yellen reiterated her warning that the government will run out of money to pay its bill as early as June 1, though stocks have seemingly shrugged off risks and ended last week in the green.
In the five days to Friday, the S&P 500 gained 1.65%, the Nasdaq was up 3.04%, and the Dow moved 0.38% higher.
But JPMorgan warned in a Monday note that equities could see a violent re-pricing similar to 2011, when the S&P 500 sold off 17% amid the last debt-ceiling standoff.
“Our base case,” the firm’s strategists wrote, “remains that the debt ceiling ultimately does get lifted/suspended though the journey to that end could be at the eleventh hour and drive significantly higher market instability than appreciated by the market currently.”
Need it explained? Great explanation here: https://www.stamfordadvocate.com/business/article/debt-ceiling-explained-why-it-s-a-struggle-in-18111613.php