The nonpartisan Congressional Budget Office (CBO) warned that the federal government could be unable to pay its bill sometime between July and September if Congress does not raise the debt limit in time.
Why it matters: The CBO forecast pushed back Treasury Secretary Janet Yellen’s previous estimate of a possible June default, giving lawmakers more leeway on lifting the debt ceiling.
What’s happening: In the estimate released with its annual budget outlook, the CBO said the projected exhaustion date is uncertain because it depends on how much tax revenue the federal government collects in the coming months.
- If revenues fall short of expectations, a historic default on the federal debt could occur before July.
- Meanwhile, it remains unclear where Biden and Republicans are in negotiations over raising the debt limit, with the two sides arguing over whether to cut government spending or lift the limit first.
The big picture: The CBO said the U.S. will add $19 trillion to its debt between 2024 and 2033 because of increased interest payments and social security costs. Also, the annual deficit will average $2 trillion over the next decade.
Opinions: Observers believed such numbers in the deficit estimate would make negotiations on the debt ceiling more difficult.
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