US Treasury Goes Full DeFi: Quadruples Borrowing to $514B While Politicians Play Chicken With Debt Ceiling

Washington’s balance sheet looks more leveraged than a degenerate crypto trader—just quadrupled its borrowing estimate to $514 billion as the debt ceiling circus rolls on.

• Printing Press on Overdrive: Treasury now plans to borrow enough to buy 10% of Bitcoin’s entire market cap—in one quarter.

• DC’s Stablecoin Protocol Fails: Politicians still can’t agree on minting parameters (aka raising the debt ceiling), so Treasury’s burning through emergency measures like a shitcoin project draining its last ETH reserves.

Meanwhile, Bitcoin’s hard-coded 21M supply cap keeps looking smarter every time the Fed’s spreadsheet jockeys hit CTRL+P. Somewhere, Satoshi is laughing—and Wall Street’s still pretending this is sustainable.

Treasury says cash shortage shaved $53 billion off estimate

The Treasury said if it hadn’t started the quarter with less cash, the second-quarter borrowing number would have been $53 billion lower. “Excluding the lower than assumed beginning-of-quarter cash balance, the current quarter borrowing estimate is $53 billion lower than announced in February,” the department said in the Monday statement.

Lou Crandall, a senior economist at Wrightson ICAP, warned before Monday’s announcement that the old February forecasts didn’t factor in new tariff hikes President Donald Trump slammed on imports. In a note, Lou said the extra tariff cash flowing in might help the Treasury manage its cash pile better. But the missing billions from the start of the quarter were already punching a hole through earlier projections.

Before Monday’s update, Wall Street traders weren’t even close to agreeing on what the new borrowing number would be. Lou said he expected the Treasury would jack up its forecast if it kept assuming an $850 billion cash balance was possible by June. 

Over at JPMorgan Chase & Co., strategists were a lot more cautious, guessing that net marketable borrowing would land at $255 billion, with the cash balance dropping to $300 billion.

The federal debt ceiling came back into force at the beginning of January. That immediately put the Treasury on a leash, blocking it from creating any more net debt. If Congress keeps dragging its feet, the department will be forced to slash bill issuance and bleed out its cash reserves even faster.

Right now, the Treasury’s cash balance stands at about $563 billion, based on last Thursday’s numbers. It’s higher than the end-of-March disaster but still nowhere close to the dream $850 billion target that officials keep clinging to.

Treasury outlines next quarter borrowing plans

Looking past June, the Treasury expects to borrow another $554 billion between July and September. It’s assuming once again that it will have an $850 billion pile of cash at the end of the third quarter. But just like everything else, that number only holds if Congress finally raises or suspends the debt ceiling.

The department said it will release its note and bond sale plans for the next few months this Wednesday. Dealers on Wall Street think the Treasury will leave those sale sizes the same, without any big shifts.

Some analysts, including Lou, are starting to wonder if the Treasury will have to rethink its whole approach to cash management. Right now, the department targets a massive cash buffer. But Lou floated the idea that officials might shrink that target if the ceiling fight keeps getting worse.

When reporters asked a Treasury official how they would announce a change in the cash balance strategy, the official reportedly said they’d likely do it through the quarterly refunding statement – just like they did during a similar situation back in 2015.

Speaking during a call, the official made it clear that no decision had been made yet, but if they were going to change course, that’s how the world would hear about it.

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