The US Department of Finance has burned cash in cash in the past month – an alarming signal for which legislators can intervene in order to prevent the country from failing to fault with the national debt.
The agency, now led by former hedge fund manager Scott Bessent, burned $ 286 billion in March alone.
This is the biggest draw of one month in American history, and it is only matched by the treasury who spent $ 279 billion in August 2021 during the pace of the pandemic.
The Treasury General Account (TGA), essentially the checking account of the US government, now only has $ 280 billion left for the expansion of funds for social security controls, government salaries and other crucial programs that rely on million Americans.
The last time the treasury of the treasury decreased this low point, was in 2023 when the US violated the debt ceiling, a legal limit that the congress has set about how much the government can borrow to pay its bills.
By May of that year, the TGA, which is managed by the Federal Reserve, was up to just $ 37 billion.
This led to the then President Joe Biden and the then speaker Kevin McCarthy closing a deal that suspends the debt limit.
The government proceeded to issue new debts in the form of bonds and by October 2023 the TGA rose back to more than $ 800 billion. It continued to give or take $ 100 billion around that amount for the rest of Biden's period.
On January 21, 2025, the day after Trump was sworn, the treasury was still equal with $ 704 billion. The account balance has fallen by an unprecedented 60 percent in just three months.
Treasury Secretary Scott Bessent (depicted outside the White House) warned in March of the House Republicans that the balance of the Treasury General Account is falling
This graph shows the cash balance on the general account of the Treasury from April 2022 to March 2025. The lowest the balance ever sank, was $ 37 billion in May 2023
The current crisis took place because the same Biden-McCarthy deal from 2023 made it so that a debt ceiling of $ 36.1 trillion would be restored on January 2, 2025.
Because the American national debt is currently $ 36.6 trillion, higher than the limit, the government is forced to raise the money that is still available on the treasury account.
In addition, the treasury has been using temporary accounting tricks called 'Extraordinary Measures' since 2 January, so that the government can continue to borrow for financing operations.
These measures will only be able to prevent an absence on the national debt until August or September, according to a report from March of the Congressional Budget Office.
Bessent wrote to the speaker of the Mike Johnson house in mid -March that he will give an update on how long the temporary loans can last after the government has collected taxes next month.
The consequences of a standard – ie the country that no longer has money to pay his bills – would be 'catastrophic' for the US and the world economy, said former finance minister Janet Yellen.
The stock market would almost certainly crash in such a scenario, with investors all over the world insight that the US – thought as the most stable government in the world – could not fulfill its financial obligations for the first time in the nearly 250 years of existence.
The pension accounts and university savings accounts for millions of Americans would dive even further than they have already taken on.
Senate majority leader John Thune and chairman of the Mike Johnson house are starting to reach an agreement on how Republicans should continue with the upcoming debt ceiling crisis
Depending on how long a potential standard lasts, the US can even slide into a recession.
A standard would also mean higher interest rates at a time when they have already been raised compared to the pre-bottom era. Americans should surprise much more to be eligible for mortgages and car loans.
In the light of these grim reals, politicians of both parties have always been stood to prevent the national debt to be in default and that they have reached the issue historically up to 11th hours.
Consensus grows among the Republicans, who control the White House and the Congress, that the only way to prevent this is to raise the debt ceiling and allow the government to stack even more to its $ 36.6 trillion in obligations.
Senate majority leader John Thune is reportedly open to increasing the debt limit by $ 4 trillion in an upcoming spending package, the details of which are still being discussed in the house and the Senate.
The budget plan of the house contains $ 4.5 trillion in tax cuts that Trump wants to pass, while the version of the Senate is not due to procedural restrictions of republican members are currently working to bypass.
As soon as the house and the senate agree on a framework, complications can arrive when the massive bill comes for a mood, because a dozen Gop sensors and 49 house republicans have never voted for an increase in debt ceiling, reported NBC News.
Trump has always supported increasing the debt limit, which could be the scene for a confrontation between him and the tax hawks of his party.
Trump has always been to raise the debt limit, something that Gop -Fiscal Hawiken do not agree with him. Senator Rand Paul is one of the most pronounced in that group
Senator Rand Paul does not support the increase in debt limit and tells Punchbowl News last week 'There will be other conservatives they will lose. “
As the negotiations continue, the fact that the treasury still has only $ 280 billion to perform, which is dangerously low, considering how much money the government spends monthly.
Last year, for example, $ 1.5 trillion was spent on social security, which on average $ 125 billion a month. That alone would eat 44 percent of the general account of the treasury.
If you add the expenses for other non-discretionary budget items, which means that they are mandatory and are not subject to annual assessment by the congress, the image becomes even worse.
The largest categories of mandatory expenses are the defense budget, Medicare, Medicaid, the Children's Health Insurance Program and subsidies from Affordable Care Act.
In 2024, the government spent a combined $ 2.57 trillion – or around $ 214 billion a month – on all these things.
Social security, healthcare and military expenditures would only lead to a deficit of $ 59 billion if the treasury should not borrow to cover it.
