Republicans in Washington have been tossing out all kinds of ideas about what they would want in return for raising the federal debt ceiling ― and the conventional wisdom has been that they have until late summer to decide.

But two economists say that’s not necessarily the case. The government could find out as soon as late April that it will no longer be able to keep borrowing or pay all the government’s bills come the first half of June, they say.

“We originally said it was a risk to be monitored. Now it’s a risk to be monitored closely,” Lou Crandall is chief economist at Wrightson ICAP’s financial analytics company. He spoke to The Sunday Review.

“Treasury hasn’t said that mid-June, early- to mid-June is the ‘X date,’ but I’d say there’s a 20% probability,” He stated.

Nancy Vanden Houten was the lead U.S. economic analyst at Oxford Economics. She had an identical assessment.

“I think there is a meaningful risk that the drop-dead date could occur in early June,” She said.

Following a meeting at the White House with President Joe Biden, Kevin McCarthy, the House Speaker (Calif.), speaks to reporters about February 1.

Kent Nishimura via Getty Images

Both economists emphasized that June is not the most likely deadline, and both saw a much greater probability of the actual deadline still being later in the summer — late July or early August for Vanden Houten, and late July for Crandall.

Washington would be under pressure to quickly negotiate if the June deadline to suspend or raise the debt ceiling is missed. Not doing so could risk a potentially catastrophic default on U.S. debt, which in turn would undermine the dollar’s role as a global reserve currency.

The lumpy way in which the government’s cash flows operate is the reason for the uncertainty over when exactly a deal needs to be struck. From January to March, the government takes out debt to finance tax rebates for income tax filers. (The Treasury Department estimes that the total amount borrowed will exceed $16 billion. $932 billion this quarter.)

However, the cash flow changes dramatically with April arriving and tax payment dates both for individuals and corporations. This April revenue flood often makes it clear whether or not the annual deficit will grow. It could also determine whether Treasury can make it to June without raising its debt limit.

“We originally said it was a risk to be monitored. Now it’s a risk to be monitored closely.”

Lou Crandall, Wrightson ICAP chief economist

Each individual income tax deadline is April 18 this year Because of a calendar quirk, the revenue picture will not be as traditional as April 15. Crandall said analysts won’t know until late April or early May what the revenue picture looks like.

“The forecast cone will narrow dramatically week by week from April 15 through the end of the month,” He stated.

Treasury wants to keep $600 BILLION in cash available in case of a temporary U.S. lockout from capital markets. This happened after Sept. 11. But Vanden Houten said Treasury’s reserve could run below $100 billion in June, “dangerously low from a risk-management perspective.”

“I think that we will have a much clearer picture at the end of April,” She said. “If individual income tax payments following the April 15 deadline were just 5% to 10% weaker than my forecast, I think the risk of Treasury running out of cash in early June would be quite elevated.”

Both the White House (R-Ohio) and the House Republicans (R-Calif.) have not yet publicly started the initial steps to what is likely to be a lengthy and potentially chaotic negotiation. On Monday, President Joe Biden met with Kevin McCarthy (R.Calif.), House Speaker. For the initial meeting, February 1,.

The White House’s opening position has been that the debt limit should not be subject to a hostage negotiation, and that implicitly threatening default is irresponsible. McCarthy said There will be no default, However, the government must remain open to negotiations with the GOP regarding as yet unspecified spending reductions.

Due to the slow pace thus far and Republicans’ inability to present a list of demands as well as the White House becoming more confident about its budget position, there is a possibility Washington may wait for Wall Street anxiety to set in. Wall Street has seen the same scenario so many times before, so it will be interesting to see if Washington waits for Wall Street to become nervous.

Treasury Department has kept it powder dry. They have been using their well-kept accounting strategy to remain below the limit, but they are not making any predictions about when that will happen. Janet Yellen, Treasury Secretary has told Congress “it is unlikely that cash and extraordinary measures will be exhausted before early June.”

Nonpartisan Congressional Budget Office (CBO) will publish its projections Wednesday along with its budget forecasts and annual economic forecasts.