Goldman Sachs economists are warning that their calculations show the United States may cease to be able to pay its obligations as soon as June 9th.
In an interview with Marketwatch, Alec Phillips, Chief Economist and Head of Global Investment Research at Goldman Sachs, and Goldman Sachs economist Tim Krupa, said the early June deadline predicted by the Treasury looks “very accurate, in our view.”
Their own calculations indicate that as of June 2nd, the Treasury’s available balance will be just over $30 billion, and those funds will have been fully expended as of June 9th.
Phillips and Krupa say it is most likely a deal on the debt ceiling will be officially announced on late Friday or early Saturday. In their analysis they predict there is an 80% chance there will be a full-fledged deal, a 10% likelihood of a short-term patch, and a 10% chance that Congress will fail to act in time.
If lawmakers fail to strike a deal to raise the federal borrowing limit, the US government will face the prospect of a default on the $31 trillion national debt. Earlier in the week, Treasury Secretary Janet Yellen had maintained that early June was a debt-ceiling deadline, after which, default would be inevitable.
On Thursday, Reuters reported that president Joe Biden and Republican Speaker of the House Kevin McCarthy were close to hashing out a deal on the borrowing ceiling, however they had still not ironed out their differences on the issue of cuts to discretionary spending, which involve a wide swath of spending on items ranging from military spending to domestic programs.
