The federal government's bank account just saw a sharp drop in cash as the default deadline looms

• The federal government's bank account just saw a sharp drop in cash as the default deadline looms.
• The Treasury General Account had $87.4 billion on Monday, down from $140 billion on Friday.

The Treasury Department's bank account at the Federal Reserve saw a sharp drop in cash earlier this week as lawmakers continue to negotiate over lifting the debt ceiling.

The Treasury General Account had $87.4 billion on Monday, down from $140 billion on Friday, according to the latest update.

That brings the cash balance to the lowest level since April 12, before tax payments to the IRS began filling up the Treasury's coffers. The cash decline is also the biggest since March 1.

The Treasury General Account is used to pay for debt service on government bonds — preventing the US from defaulting — among the myriad other outlays like federal employee salaries.

While the government's bank account will see more tax payments come in starting on June 15, the sudden drawdown raises the risk that the Treasury Department may not have enough to last that long, setting up a potential default.

On Monday, Treasury Secretary Janet Yellen reaffirmed her warning that the government could run out of money as soon as June 1.

Meanwhile, lawmakers are continuing to negotiate over raising the debt ceiling, with some signs that Republicans in Congress and President Joe Biden are making progress.

On Tuesday, House Speaker Kevin McCarthy said it's possible to reach a debt deal by the end of the week. And on Wednesday, he told CNBC that "Now we have a structure to find a way to come to a conclusion. I think at the end of the day we do not have a debt default. I think we finally got the president to agree to negotiate."

For his part, Biden said he will cut short an overseas trip and return to Washington, DC, on Sunday in a sign that talks are heating up.