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The US government is barreling towards the day it can no longer pay its bills unless Congress passes legislation raising the debt ceiling. However, that so-called X-date may be on an accelerated timeline for some unlikely reasons.
Earlier this year, the Congressional Budget Office estimated that the X-date would come between July and September, but in a letter to House Speaker Kevin McCarthy this month, Treasury Secretary Janet Yellen wrote that “after reviewing recent federal tax receipts, our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1.” She reiterated that same timeline this week.
While the Treasury Department hasn’t explicitly given a reason for its tax revenue deficiency, experts have said two main factors may have caused a shortfall.
Falling stock and crypto prices may have taken a toll
Capital gains taxes, which is money owed on profits from the sale of investments, were a significant piece of the tax puzzle that fell short this year, according to Michael Pugliese, a senior economist at Wells Fargo.
