April tax receipts fell short of expectations, accelerating the date of potential default if the debt limit is not increased. This caught both the President and Congress off guard as they were prepared for a July or August default debate.
The most likely outcome of this accelerated timetable is a temporary debt limit extension to give both sides the time to firm up their strategy, develop their talking points, and spin their preferred narratives for their followers to repeat.
Once the debt limit is resolved, the most likely next pressing issue will arrive on October 1 when the federal government’s fiscal year ends. Congress is supposed to begin working on next year’s budget now so that it is completed by September 30. There is absolutely no sign this work is beginning. Thus, several temporary continuing resolutions and a year-end omnibus bill to avoid a government shutdown appear to be the default outcome.
Thus far, the 118th Congress has successfully passed three bills that have been signed into law by the President. We do not see momentum for any legislation that would impact your financial plan or taxes at this time.
As of this writing, our federal debt totals $31,459,291,842,710.78. This will jump up when the new debt limit is passed as the U.S. Treasury repays the money it has borrowed using “extraordinary measures.”