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When will the US run out of cash?

The Treasury Department cannot determine the exact date the US government will run out of cash, but refers to the date as the “X-date”. The problem has been developing for months. The US reached its statutory debt limit on Jan. 19, which caused the Treasury Department to begin using workaround accounting maneuvers to conserve cash and avoid breaching the cap.

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With the possibility of now depleting cash reserves by June 1, the actual date when the Treasury runs out of cash to pay government bills could be days or weeks later than that. The lower the cash reserves, the harder it is to predict when a default would happen, due to the process of huge payments going out and tax revenues coming in, making an exact date a moving target that’s difficult to pinpoint.

Some analysts think that if no deal is signed into law by Memorial Day, and the X-date is potentially still on course to happen, that short-term suspension of the borrowing cap could be imposed to give Congress more time. Comparisons have been drawn to the debt crisis in 2011, when an agreement was not made until days before the US could have defaulted on its debt. Negotiations saw similar arguments for spending cuts made by GOP-led lawmakers, in exchange for raising the debt ceiling.

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