As the funds run out, the Ministry of Finance asks if payments can be made later (2023)

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The Treasury Department has asked federal agencies whether they can make the upcoming payments at a later date, two people familiar with the matter said, as senior Biden officials look for new ways to save money and avoid an unprecedented bankruptcy.

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With the deadline approaching in less than two weeks, the White House is considering how to buy more time for President Biden and House Speaker Kevin McCarthy (D-Calif.).brokers a deal to raise the federal debt limit, which sets a legal limit for the state's borrowing. Without further borrowing, another burst of tax revenue or new ways to curb spending, the federal government expects to miss a payment for the first time in modern history in early June.

To delay the so-called "X date" when stocks run out, the Treasury Department has asked their counterparts at federal agencies for flexibility for payments due before early June, one of the people said. The Treasury Department has not asked federal agencies to delay payments beyond the due date, the person said.


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Planning has become more and more urgent in recent days. Last week, senior Treasury officials sent a memo to federal agencies asking them to take additional steps to keep the Treasury closely informed about their spending. In the memo — which was obtained by the Washington Post and has not been previously reported — David A. Lebryk, assistant treasury secretary, ordered agency officials to notify the Treasury Department at least two days of any "deposits and withdrawals" between $50 million and $500 million. Payments above $500 million require five days' notice, the memo said.

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"Please emphasize to your staff the importance of these updates at this time and to ensure your business reporting is accurate," the memo said. "Your reporting agencies should reconcile reported amounts with actual payment activity to ensure the reliability of these reports during the critical period."

Negotiations to find broad agreement ondebt ceilingcontinued for several hours Tuesday between representatives of Biden and McCarthy, but little progress appeared to have been made after Monday night's meeting between the two leaders, who remain at odds over how much the federal government should spend next year and other issues. Walking on Capitol Hill Tuesday morning, McCarthy said the two sides are still far apart. When asked if he was close to a deal, McCarthy said "no," though he said it was still possible a deal could be finalized before June 1. White House spokeswoman Karine Jean-Pierre, meanwhile, told reporters the talks "are productive," adding, "We believe there is room here and an opportunity to get a bipartisan, sensible, sensible budget deal. "

Bipartisan Policy Center, a D.C.-based think tank. whose debt ceiling estimates are under close scrutiny,reported Tuesdaythat he expected the US government to run out of money between June 2 and June 13 if the cap is not raised. Major stock indexes closed slightly lower on Tuesday as traders looked ahead to the prospect of a default.


White House spokesmen declined to comment on the effort to save money before the deadline. A Treasury spokesman said: "In order to make an accurate forecast around the debt ceiling, it is important that the Treasury has up-to-date information on the size and timing of payments to organisations. As in previous episodes of the debt ceiling, the Treasury will continue to communicate regularly with all aspects of the Federal Government on their planned expenditure."

Determining the exact amount available to make federal payments has become especially critical as some Biden aides look for ways to buy more time for talks on the high debt ceiling between the White House and Capitol Hill.

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In a letter to lawmakers on Monday, Treasury Secretary Janet L. Yellen confirmed that Congress only has until June 1 before the federal government runs out of money, though she again predicted the Treasury Department could hold out until "early June." . Some Wall Street forecasters said the actual X date — the day the government finally misses a payment — is likely to be June 8 or 9.


With a large influx of quarterly tax payments expected to arrive at the treasury on June 15, officials are looking for ways to raise cash and get through a few more days. If they can make it to June 15, the revenue surge could give the Treasury enough financial resources to push the X date to July, when a second round of accounting measures would be available, perhaps pushing the prospect of a default even further. the future.

"They probably have some tricks up their sleeves to get to June 15," said Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget, a Washington-based think tank. "And if they make it to June 15, they can last a lot longer."

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Administrators do not count on this strategy. Yellen is convinced that the only way to avoid disaster is for Congress to raise the debt ceiling before June. Independent budget experts have pointed out that there are no good legal options to significantly increase the amount of cash available to the treasury.


Meanwhile, some experts fear that extending the deadline could have the unintended consequence of creating more uncertainty among lawmakers, which could take pressure off their rush to reach a deal to lift the $31.4 debt ceiling. growing up. as soon as possible.

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Brian Riddle, a policy analyst at the Manhattan Institute, a libertarian think tank, said it's unclear whether the Treasury Department can find much of the available capital they're looking for in the cushions of the nation's banks.

"Washington borrows $100 billion a month, and the chances of finding a significant pile of cash that went unnoticed are slim to none," Riedl said.

If the US reaches the brink, Biden aides are already investigatingunilateral choiceto prevent what many economists believe would be a global financial crisis. One official, who spoke on condition of anonymity to describe internal government negotiations, agreed that "we are looking under the sofa cushions". But, the person said, "it's a really big sofa."

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Administration officials declined to elaborate on the actions being considered, but outside analysts outlined some possible options.


Alec Phillips, chief U.S. economist at Goldman Sachs Research, pointed to "a little belt-tightening" as a possibility by which the Treasury could designate agencies -- such as the Defense Department and the Centers for Medicare and Medicaid Services and Medicaid. slow down their payment submission process. That wouldn't be the same as ordering them to stop payments, but it could slow the flow of money from the treasury.

Such actions "do not solve their problem, but could be enough if they were looking for a little extra space (which is likely all they need in June)," Phillips said in an email.

The Treasury could also sell bonds held by some of the government's huge trust funds, such as the Social Security Trust Fund or the Highway Trust Fund. It could raise tens of billions of dollars immediately, some experts said, and trust funds could easily be restored once the impasse ends.


However, these ideas also have their drawbacks.

The law requires contractors and those who owe the federal government to be paid immediately. Otherwise the government would they face redemption penalties, which can include an additional 4.6 percent interest, Riedl said. Federal agencies could also resist efforts to delay or stop payments, citing a 1974 law that prevents the executive branch from replacing congressional decisions with its own spending priorities.

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"I don't think any career employee in an agency would risk violating [this law] by knowingly delaying a payment to avoid the X date," said David Vandivier, who served as deputy assistant secretary for budget and taxation. in the Treasury Department's Office of Legislative Affairs during the Obama administration and is now executive director of the Center for Financial Markets and Fish Policy at Georgetown University.


The Treasury Department could come up with an extra few billion dollars by using Federal Financing Bank interest-bearing bills, which help provide cheap loans for federal programs, said Shai Akabas, director of economic policy at the Bipartisan Policy Center. But that would likely equate to less than a day of federal payments.

Akabas said other options, such as delaying payments or raiding trust funds, carry other risks. The Biden administration has resisted calls to end the debt ceiling by invoking the 14th Amendment or minting a $1 trillion coin, actions they see as dangerous and subject to legal challenge. The current search for ways to extend the X-date could similarly throw the administration into uncharted waters.

More dramatic options are available. Biden has the power to sell US assets, such as parks or federal buildings, to raise money, but that would almost certainly trigger a political backlash. Dean Baker, an economist at the Center for Economic and Policy Research, has noted that the president could sell some of the Treasury's $500 billion in gold holdings.


There is no indication that either idea is being considered, although Treasury Secretary James A. Baker IIIthreatened to sell gold bonds during a similar standoff over the debt ceilingi 1980.

"There are measures they could consider, such as effectively ordering agencies to wait for bills to be paid, which could delay the payment of bills. But that would be a very big task. And I'm not sure where long they would delay X-date at all,” said Akabas.

He added: "We've done this exercise dozens of times before. So if something was readily available, you'd think we'd have heard about it."

What you need to know about the US debt ceiling

The last:On Friday, Republicans in Congress and the White House were silentstruggling to avoid catastrophic bankruptcy. If the debt ceiling is not raised within the stipulated period,This is what state bankruptcy meansIpayments at risk. Be heredealers enter into an agreement on the debt ceiling.

Understand the fight over the debt ceiling:Biden and the House Republican leadership are on a collision coursethe national debt limit. In this lane, seehow reaching the debt ceiling can lead to chaos;. Here iswhen the fight against the debt ceiling could end.

What is at stake?Invoking the 14th AmendmentAvoiding the debt limit is dangerous, White House officials say. If the debt limit is exceededBiden warned that it could send the US economy into free fall. ThatExceeding the debt ceiling could destroy 8 million jobs, a recent analysis found. In the middleconsumers' fear of uncertainty, financial experts warn against making decisions based on fear.

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Applicants must have established records of effective performance and sound financial management (as reflected, for example, in recent audited financial statements). Applicants must also agree to report to the IMF on their use of grants received from the IMF.

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The IMF is an organization of 189 member countries that works to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

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The impact of IMF loans has been widely debated. Opponents of the IMF argue that the loans enable member countries to pursue reckless domestic economic policies knowing that, if needed, the IMF will bail them out. This safety net, critics charge, delays needed reforms and creates long-term dependency.


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