WASHINGTON (Reuters) – The U.S. government will probably risk defaulting on some of its $36.6 trillion in debt as soon as August – or possibly even by late May – unless Congress acts to raise the nation’s debt ceiling, the non-partisan Congressional Budget Office forecast on Wednesday.
The CBO’s forecast of the so-called “X-date” when the Treasury Department would no longer be able to cover its obligations follows an estimate by the Bipartisan Policy Center on Monday that the U.S. could face the risk of default sometime between mid-July and early October.
The CBO said the date would “probably” occur in August or September.
But the agency warned that in the meantime, if borrowing needs exceed CBO projections, “the Treasury’s resources could be exhausted in late May or sometime in June.”
Establishing a firm X-date is difficult “because the timing and amount of revenue collections and outlays over the intervening months” is a moving target, CBO explained.
For example, the short-term flow of revenues into the Treasury will not become more clear until the government calculates receipts around the April 15 deadline for taxpayers to submit annual filings. CBO noted other important dates: a mid-June tax payment deadline and additional extraordinary measures that become available on June 30.
A failure by Congress and President Donald Trump to agree upon and enact a debt limit increase would bring severe consequences.
“If the debt limit is not raised or suspended before the extraordinary measures are exhausted, the government will be unable to pay all of its obligations. As a result, it would have to delay making payments for some activities, default on its debt obligations, or both,” CBO warned.
Republicans, who control the U.S. House of Representatives and Senate, have not said when they intend to advance legislation to raise Congress’ self-imposed debt limit.
Lawmakers have repeatedly taken negotiations over raising the government’s borrowing limit to the last minute, a trend that has rattled financial markets and led the major credit agencies to lower their ratings on the federal government’s creditworthiness.
(Reporting by Richard Cowan; Editing by Scott Malone, Jamie Freed, Makini Brice and Paul Simao)
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