(WASHINGTON) — The U.S. risks defaulting on its debts as early as July unless the borrowing limit is raised, the nonpartisan Congressional Budget Office said in a report on Wednesday.
The federal government on Jan. 19 reached its approximately $31.4 trillion debt ceiling — which legally caps how much the U.S. can borrow to pay for what tax and other revenue doesn’t cover — and the Treasury Department has since been using “extraordinary measures” along with its current cash flow to keep the government’s obligations paid.
“CBO estimates that under its baseline budget projections, the Treasury would exhaust those measures and run out of cash sometime between July and September of this year,” according to the report.
The CBO projection adds urgency to an ongoing political dispute in Congress over the debt ceiling. Some Republicans in the House have resisted an increase of the debt limit unless Democrats agree to spending cuts. The Biden administration, however, has repeatedly said that it will not negotiate over the debt ceiling and that a discussion over spending should occur separately.
Speaking with “Good Morning America” last week, Treasury Secretary Janet Yellen called on Congress to raise the debt limit.
“America has paid all of its bills on time since 1789, and not to do so would produce an economic and financial catastrophe,” Yellen said. “Every responsible member of Congress must agree to raise the debt ceiling.”
She added, “It’s something that simply can’t be negotiable.”
Failure to raise the debt limit and the ensuing default on U.S. debt — which have never happened before — would cause immense harm to the U.S. and global economies, since the trustworthiness of U.S. Treasury bonds amounts to a cornerstone of domestic and international investment, economists and budget analysts previously told ABC News.
This is a developing story. Please check back for updates.
Copyright © 2023, ABC Audio. All rights reserved.
