CBO sees U.S. default in first half of June, tax receipts may buy more time
2023.05.12 11:18
© Reuters. The U.S. Capitol building is seen in Washington, U.S., April 6, 2023. REUTERS/Elizabeth Frantz
By David Lawder
WASHINGTON (Reuters) – The United States faces a “significant risk” of defaulting on payment obligations within the first two weeks of June without a debt ceiling increase, the Congressional Budget Office said on Friday, adding that payment operations will remain uncertain throughout May.
The non-partisan budget referee agency’s new estimate largely tracks Treasury Secretary Janet Yellen’s June 1 deadline for a potential default, underscoring the urgency of resolving a bitter standoff between Republican and Democrats, even as a Friday debt limit meeting between President Joe Biden and top lawmakers was postponed.
But CBO held out hope for more negotiating time, saying the Treasury can “probably” finance government operations through at least the end of July if available cash and extraordinary borrowing measures can last through June 15, when quarterly estimated tax payments are due.
On June 30, the Treasury will be able to access $145 billion in new extraordinary borrowing measures by suspending investments in two government employee retirement and health funds.
“The extent to which the government will be able to fund the government’s ongoing operations will remain uncertain throughout May, even if the Treasury ultimately runs out of funds in early June,” the CBO said in a statement.
“That uncertainty exists because the timing and amount of revenue collections and outlays over the intervening weeks could differ from CBO’s projections,” the CBO said.
