US risks debt default as soon as July: CBO

FILE – The Treasury Department is seen near sunset in Washington, Jan. 18, 2023. The national debt is at the core of a dispute about how to raise the government’s legal borrowing authority, which could come to a head this summer if the government runs out of accounting maneuvers to keep paying its bills. (AP Photo/Jon Elswick, File)

The federal government could default on its debt as early as July if Congress is unable to raise the debt limit, according to a report released Wednesday by the Congressional Budget Office (CBO).

The nonpartisan budget scorekeeper said the Treasury Department could exhaust the so-called “extraordinary measures” it began taking last month to stave off a default sometime between July and September.

The office noted that it is difficult to pinpoint an exact date, as factors like revenue collected during tax season and government spending in the next few months could have an impact on the timeline.

“In particular, income tax receipts in April could be more or less than we estimate,” CBO director Phillip Swagel said in a prepared statement. 

“If those receipts fell short of estimated amounts—for example, if capital gains realizations in 2022 were smaller or if U.S. income growth slowed by more in early calendar year 2023 than we project—the extraordinary measures could be exhausted sooner, and the Treasury could run out of funds before July,” he said.

The report comes a month after the Treasury warned it could run out of the emergency measures as soon as June, after the national debt reached the roughly $31.4 trillion threshold set by Congress more than a year ago.

The threat has already sparked concern among experts who are calling on Congress to act sooner rather than later to raise the debt ceiling, which puts a cap on how much money the Treasury can owe to cover the country’s bills.

At the same time, the looming deadline has triggered a high-stakes battle on Capitol Hill over the nation’s finances, as Republicans press for significant fiscal reform to be tied to any legislation raising the limit with proposals that Democrats have already panned as nonstarters.

–Updated at 2:58 p.m.

Tags CBO Congressional Budget Office debt ceiling deficit Phillip Swagel

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