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Treasury Asks Federal Agencies to Put Off Payments

S.J. Steinhardt
Published Date:
May 23, 2023

iStock-157679087 Treasury Department

The U.S. Department of the Treasury has asked federal agencies about the flexibility of payments due before the end of June, as it may run out of cash soon if Congress does not raise the debt ceiling, The Washington Post reported.

The so-called X-date, the date when Treasury can no longer pay bills already due, could be as soon as next week. A memo from Fiscal Assistant Treasury Secretary David A. Lebryk ordered agency officials to notify Treasury at least two days in advance of all “deposits and disbursements” of between $50 million and $500 million. Payments above $500 million require five days notice, said the previously unreported memo, which was obtained by the Post.

“Please stress to your staff the importance of these updates during this time and to ensure that your agency’s reports are accurate,” it read. “Your reporting offices should be reconciling reported amounts to actual payment activity to ensure the reliability of these reports during the critical period.”

“To produce an accurate forecast around the debt limit, it’s critical that Treasury have updated information on the magnitude and timing of agency payments,” a Treasury spokesperson told the Post. “As in prior debt limit episodes, Treasury will continue to regularly communicate with all aspects of the federal government on their planned expenditures.”

The administration is hoping to keep paying bills until June 15, when quarterly tax payments are due. “It’s possible they have some tricks up their sleeves to get to June 15,” Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, a Washington-based think tank, told the Post. “And if they get to June 15, they can go a lot longer.”

But extending the deadline in this manner could only serve to create more uncertainty. “Washington is borrowing $100 billion a month, and the odds of finding a significant pile of cash that hadn’t gone noticed is between slim and none,” said Brian Riedl, a policy analyst at the libertarian-leaning think tank Manhattan Institute.

Biden aides are exploring unilateral options, such as Treasury directing agencies to slow down their process for submitting payments or selling bonds held by the Social Security Trust Fund or the Highway Trust Fund. Either option would not solve the long-term problem, however.

Other dramatic options include selling U.S. assets such as parklands or federal buildings to raise money, or selling off a portion of the Treasury’s $500 billion in gold reserves. Neither option is under serious consideration, the Post noted.

In the end, the best option is to raise the debt limit.

“We’ve been through this exercise dozens of times before,” said Shai Akabas, director of economic policy at the Washington-based Bipartisan Policy Center think tank. “So if there was something readily available, you think we would have heard about it.”

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