The Congressional Budget Office (CBO) cautioned that the US government might default on its debt obligations sometime between July and September 2023.
According to the CBO’s projections, the US economy is on the verge of a default under the current limit of the federal debt. The experts warn that the US government might drain its purse in July – September this year. The CBO analysts say if the ceiling of the public debt remains at the current level, “the extraordinary measures could be exhausted sooner, and the Treasury could run out of funds before July,” the report reads. Therefore, the US government will exhaust its cash on hand by Q4 2023.
Due to grim prospects, top Republicans and Democrats on Capitol Hill called on lawmakers to lift the borrowing limits or suspend them. “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. As a result, the government would have to delay making payments for some activities, default on its debt obligations, or both,” the CBO underscores.
In January 2023, Washington reached the current debt limit. It was the crunch time when the Treasury launched emergency measures to avoid a default. Later in February, Kevin McCarthy, the current House of Representatives speaker, rejected the idea to increase the federal debt ceiling without the reform of public spending. The official said that the time was ripe to enact drastic cuts to federal spending.
Earlier, White House spokesperson Karine Jean-Pierre said that President Joe Biden turned down the negotiations on this issue. The US leader insisted that Congress should pass a new debt limit without preconditions. The President is ready to discuss cuts in the budget deficit with lawmakers.
