The much-celebrated tax cuts passed by Republicans last year - credited already with increasing jobs, wages, and other economic benefits - have led to a draining of government coffers, and the outpouring of cash is happening faster than anticipated.
If Congress does not raise the debt ceiling by early March, the U.S. will default on its obligations.
According to the nonpartisan Congressional Budget Office, the federal government will run out of money even sooner than expected, thanks to the new tax legislation, which is estimated to lead to a fall in revenue of $136 billion in 2018. A default on debts had originally been forecasted for late March or early April. But now, because of the new withholding tables, “withheld receipts are expected to be less than the amounts paid in the comparable period last year.”
That, combined with the fact that the Treasury generally issues a high number of tax refunds in February and March, means that the $272 billion in cash the Department had on hand as of Tuesday will quickly dwindle. If the debt ceiling isn’t increased by the first half of March, the C.B.O. cautioned on Wednesday, “the government would be unable to pay its obligations fully,” and would be forced to delay payments, default on its debts, or both.
But Congress is currently mired in other messes - progress on immigration continues to elude the legislative body and without a spending bill, another government shutdown could be on the horizon.
A proposal to raise the debt ceiling may repel G.O.P. deficit hawks, who in the past have pushed for spending cuts before allowing a vote. And Democrats may be equally hesitant to support the measure, particularly if there’s been zero progress on the immigration front.