Washington — The federal government is likely to run out of cash to pay the bill in October or November unless Congress raises or suspends federal borrowing limits, the Congressional Budget Office said Wednesday.
Congress voted in 2019 Suspend debt cap Until July 31st of this year. Since then, the country has added $ 6.5 trillion in debt, bringing total debt to $ 28.5 trillion.
If lawmakers fail to reach another agreement by the end of the month, the borrowing limit will automatically return to that level and the Treasury will not be able to raise additional cash from the sale of government bonds.
If new cash cannot be raised, the Treasury said it will continue to take special steps to keep paying government bills in full and on time. These measures, such as redeeming certain investments in federal pension programs and suspending new investments in those programs, have previously released enough cash to last for months.
But the financial authorities Warn Congress Such measures may be exhausted sooner than before.Janet Yellen June hearing The pandemic has increased uncertainty about the size and timing of government spending, adding that the Treasury could have no room to pay government bills as early as August.
The Treasury’s cash balance is projected to reach $ 450 billion at the end of July. However, the CBO estimates that federal revenues totaling $ 786 billion and spending will reach $ 1.551 trillion from July to September.
The CBO acknowledged the difficulty of making accurate predictions about how long the Treasury could survive without new borrowing.
“The timing and size of revenue collection and spending over the next few months may differ significantly from the CBO’s forecast,” a nonpartisan budget bureau said Wednesday. “Therefore, special measures may be exhausted and the Treasury may run out of cash earlier or later than the CBO project.”
At that point, the Treasury may begin to miss out on debt payments to bondholders, social security beneficiaries, and veterans, leading to default.
US government debt has been on the rise for 20 years, but debt has skyrocketed since last year as it spent fighting the economic and human suffering of Covid-19. The federal deficit increased from $ 948 billion in 2019 to $ 3.129 trillion in 2020.
Thanks in part to the strong economic recovery, The deficit is expected to decrease in the next few years.. In another report on Wednesday, the CBO predicted that the federal budget gap in 2023 would shrink to $ 789 billion, compared to an estimated $ 3 trillion this year ending September 30.
Democrats have chosen not to include President Biden’s debt cap hike $ 1.9 Trillion Coronavirus Relief Package, Was passed in March. That is, lawmakers need to include raising or suspending debt limits in other legislation.
A complete default by the US government has never occurred. However, the dispute over debt caps has occasionally upset investors. In 2011, when the Republican Party demanded a policy change in exchange for a higher debt limit, stock prices fell in uncertainty and Standard & Poor’s downgraded the US debt rating.
Write to Paul Kiernan at firstname.lastname@example.org
Copyright © 2021 DowJones & Company, Inc. all rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
According to the CBO, the Treasury could run out of cash in October or November unless the debt cap is lifted.
Source link According to the CBO, the Treasury could run out of cash in October or November unless the debt cap is lifted.