Today’s Daily Treasury Statement indicated that month-to-date non-withheld income tax receipts through April 20 are now 35% ($138bn) below last year’s levels and 37% ($149bn) below the adjusted levels. While we are now through the three most important days of tax receipts in terms of expected volume, the data remain preliminary as we have only received around 56% of the tax collections we expect Treasury to collect this spring.
Setting aside the discussion of why tax receipts are running a third below where they were a year ago, the implications are ominous: not only is the US not collecting anywhere near enough cash to be able to fund its regular outlays (which means the Fed will soon have to step in and monetize debt issuance again), but a more pressing issue is that the US will hit its debt-limit deadline, aka the X-date beyond which Emergency Measures are exhausted, as soon as June,sparking another political crisis in just over a month.
