IRS Refund Delays Could Force Changes in the Supply of Treasury Bills
- Shutdown, looming ceiling deadline have Treasury in a bind
- Cash balance needs to fall; disbursing refunds is part of that
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As the U.S. government shutdown continues, one potential consequence of it threatens to disrupt the supply of Treasury bills.
Assuming that no agreement is reached to extend the suspension of the debt ceiling, which ends March 1 and is a distinct issue from the current shutdown, the Treasury Department will need to reduce its cash hoard to about $200 billion, where it stood in February 2018, from about $385 billion. If refunds to taxpayers are delayed when the tax filing season begins Jan. 28, that money will remain in the Treasury’s coffers, possibly forcing the government to issue fewer bills to avoid accumulating cash.