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Government Heads For Budget Collapse

The US Treasury, running short of cash, announced a $15 billion, 6 day cash management bill to carry it through to June 15 tax collections and settlement of new notes and bonds. The government is massively overshooting Treasury Borrowing Advisory Committee (TBAC) borrowing estimates issued in May. As I pointed out in the Treasury update at at the time, the government’s and the TBAC’s economic assumptions have been way too optimistic. This week, the government is $24 billion over the TBAC estimate for what it would need this week. Debt ceiling issues notwithstanding, revenue is way behind projections. The US government is headed for a budgetary collapse. Buyers of long term Treasuries are whistling in the graveyard.

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