Douglas Rissing/iStock via Getty ImagesA short-term extension is looking like the most likely outcome on the debt ceiling with the deadline coming as soon as June, Goldman Sachs said Tuesday.”Treasury Sec. Yellen has informed Congress that the Treasury will exhaust funds under the debt limit ‘potentially as early as June 1’ but possibly ‘a number of weeks later’,” Goldman economist Alec Phillips wrote in a note. “While we thought the Treasury would be able to pay obligations until late July under the debt limit, the early deadline is not surprising, given that we project Treasury’s cash balance could dip as low as $25-30bn in early June, which is roughly the minimum cash balance Treasury usually uses to project its deadline.””There is very little time on the legislative calendar to reach a deal,” Phillips said. “The House is scheduled to be in recess this week and again starting May 26, while the Senate recesses the week of May 22, returning May 29. This leaves only two weeks when both chambers are in session before early June.””Negotiations on spending changes or other policies that Republicans have proposed have not yet started,” he said. “We have expected a final debt limit agreement to include some form of spending caps, which are simple and could be written quickly (it involves choosing a dollar amount, or a few dollar amounts, for each year) but difficult to agree on.””A near-term deal could lead Congress to consider a short-term extension,” he added. “If congressional Republicans decide that reaching a deal is unlikely before June 1, a short-term extension is a clear possibility.””If deemed necessary, the most likely new deadline would be (1) late July, since this is what many lawmakers had expected and it coincides with the start of the long August recess, or (2) September 30, the end of the fiscal year when a deal on spending levels for FY2024 will be necessary in any case to avoid a government shutdown (a shutdown would occur due to a lapse in spending authority and is unrelated to the debt limit).””That said, voting for a debt limit increase twice is harder than voting for it once, so we would expect Republicans to be reluctant to press a short-term extension if they think they can avoid one,” Phillips said. “While Democrats would likely prefer a single long-term extension (to 2025), they might have no choice but to go along with a ‘clean’ (or nearly clean) short-term extension if Republicans offer it just before the deadline.”Dear readers: We recognize that politics often intersects with the financial news of the day, so we invite you to click here to join the separate political discussion.