The United States Congressional Budget Office (CBO) on Wednesday said the Treasury Department will exhaust its ability to pay all its bills sometime between July and September unless the $31.4 trillion cap on borrowing is raised or suspended.
In a report issued alongside its annual budget outlook, the non-partisan CBO cautioned that a historic federal debt default could occur before July if revenues flowing into the Treasury in April – when most Americans typically submit annual income tax filings – lag expectations.
The pace of incoming revenues, coupled with the performance of the US economy in coming months, makes it difficult for government officials to predict the exact “X-date” – when the Treasury could begin to default on many debt payments without action by the US Congress.
“If the debt limit is not raised or suspended before the extraordinary measures are exhausted, the government would be unable to pay its obligations fully,” the CBO report said. “As a result, the government would have to delay making payments for some activities, default on its debt obligations, or both.”
Separately, the CBO said annual US budget deficits will average $2 trillion between 2024 and 2033, approaching pandemic-era records by the end of the decade – a forecast likely to stoke Republican demands for more spending cuts.
The sobering analysis reflects the full impact of recent spending legislation, including investments in clean energy and semiconductors and higher military spending, along with higher healthcare, pension and interest costs. It assumes no change in tax and spending laws over the next decade.
