Treasury will run out of room under the debt limit between July and September: CBO
Zachary Halaschak
Video Embed
The United States will run out of ways to prevent the government from defaulting sometime this summer, between July and September, the Congressional Budget Office projected Wednesday.
That deadline is later than the one that has been given by the Treasury Department, which is for June. The U.S. hit its debt ceiling last month, and the Treasury Department began “extraordinary measures” to prevent default. The measures essentially amount to shifting money around government accounts in order to pay incoming bills without issuing new debt.
IF CONGRESS DOESN’T RAISE DEBT CEILING — THE OPTIONS, FROM UGLY TO UNTHINKABLE
“The projected exhaustion date is uncertain because the timing and amount of revenue collections and outlays over the intervening months could differ from our projections. In particular, income tax receipts in April could be more or less than we estimate,” the CBO noted.
If revenue falls short of what is projected, the CBO said the extraordinary measures could end up being exhausted sooner and that the Treasury could run out of funds before the start of July.
The much-anticipated Wednesday report gave a bit more insight into what could be the most consequential showdown over the debt ceiling in about a decade. Republicans are hoping to use the looming date to extract concessions from the Biden administration. They hope to see spending cuts in light of soaring inflation and high deficits.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
The so-called extraordinary measures have been used at least 16 times since first being deployed in 1985 and as recently as 2021, according to the Committee for a Responsible Federal Budget. The U.S. has never defaulted on its obligations in the history of these fiscal showdowns.
A default is thought to be a devastating prospect for the economy, and most economists are calling upon lawmakers to raise the debt ceiling to prevent such an occurrence.