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U.S. risks debt default as soon as July, Congressional Budget Office estimates
March 30, 2023
The U.S. Treasury Department building. Photo by Saul Loeb/ AFP via Getty Images
The U.S. government could be at risk of a payment default as early as July if the debt limit isn't raised, the nonpartisan Congressional Budget Office said on Wednesday.
Why it matters: The estimate, released alongside the agency's outlook for the federal deficit and the economy in the next 10 years, comes as Congress braces for a fight over raising the debt ceiling — a necessary step so the government can continue paying its bills.
The estimate is the latest guess of when extraordinary measures to borrow additional funds will be fully exhausted.
Catch up quick: Treasury hit the federal debt limit last month and has undertaken extraordinary measures so the U.S. can continue to meet its debt obligations. Treasury previously estimated that these extraordinary measures would be exhausted in June.
Details: The CBO said the government is at risk of a payment default between July and September, should Congress fail to raise the debt limit.
Where it stands: There are warnings of dire economic consequences if the debt limit isn't raised.
What they're saying: "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 agency said in a release.
"As a result, the government would have to delay making payments for some activities, default on its debt obligations, or both."
Of note: The nonpartisan agency warned this timeline was highly uncertain. The government could breach the debt limit sooner or later than they anticipate, depending on whether revenue and spending differ from their projections.