US can avoid default in July if it gets money in June: CBO
People walk and ride bicycles past the US Capitol in Washington, DC, on May 11, 2023.
Jim Watson | AFP| Getty Images
WASHINGTON – The Congressional Budget Office said Friday that tax revenue and emergency measures after June 15 “will likely allow the government to continue funding operations through at least the end of July.”
The updated guidance confirmed the CBO’s earlier uncertainty about the debt level in the first few weeks of June. Even though mid-June tax revenue could put pressure on the Treasury through July, there is still a risk of it going wrong in the first few weeks of June, a senior official said. government statement.
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“If the debt limit remains unchanged, there is a significant risk that at some point in the first two weeks of June the government will not be able to pay all of its obligations,” the CBO report said.
The new report came as the White House and congressional leaders canceled a scheduled Friday meeting to continue negotiations, citing little progress so far on any agreement to cut spending and fix that debt hike.
Read more: Confused about the debt ceiling? Here’s what you need to know
“The extent to which the Treasury will be able to fund the ongoing work of government will remain uncertain through May, even if the Treasury runs out of cash in early June. the intervening weeks may differ from CBO projections,” the latest report said.
The CBO also released an updated projection of the federal budget deficit for 2023, raising it to $1.5 trillion.
The office warned that there was still “a lot of uncertainty” about the deficit number, in part due to the Supreme Court’s decision on President Joe Biden’s student loan forgiveness plan.
Legal experts told CNBC that the nation’s highest court appears likely to strike down the $400 billion debt forgiveness plan, with the court’s conservative majority.
If that happens, the administration would likely record the money it set aside for loan forgiveness last year as a reduction in spending this year, the CBO said.
The CBO is a nonpartisan federal agency that provides balanced budget and economic data to Congress, usually to inform legislation.
Debt ceiling talks were suspended less than a day before Biden was scheduled to sit down with House Speaker Kevin McCarthy, R-Calif., Senate Minority Leader Mitch McConnell, R-Ky., Senate Majority Leader Chuck Schumer, DNY, and House Minority Leader Hakeem Jeffries, DNY.
That meeting was to be the second this week, after Tuesday’s huddle failed to produce any significant developments.
It was unclear Friday what effect, if any, the new report would have on negotiations currently underway at the staff level, between supporters of the four congressional leaders and staff connect the White House.
As both the House and Senate prepared to adjourn for the weekend on Thursday, McCarthy said he had seen “no real concern” from the White House about any possible deal. “It looks like they want to do more than they want a deal,” the California Republican told reporters in the Capitol.
Democrats seemed equally dignified, as Schumer said in a letter to his caucus on Friday, in which he said staff-level talks would continue in the coming days.
But even as aides worked to find common ground, Schumer said Democratic senators would “continue to highlight the devastating impact” of cuts to the federal budget that are part of a bill that Republicans have introduced. A house with him last month.
At the heart of the partisan conflict is the White House’s insistence that Congress will vote to raise the debt limit without preconditions, and House Republicans’ demand that any increase in the debt limit be paired with major cuts to federal spending and new work requirements for social safety net programs.
Failure to raise the debt ceiling before the US runs out of available funds and emergency measures would cause a “catastrophic economic disaster,” Treasury Secretary Janet Yellen said Monday.
“That’s something that could create financial chaos, it would greatly reduce the level of spending and it would mean that Social Security recipients and veterans and people would count on government money owed to them, contractors, we just wouldn’t have enough money. to pay the bills,” Yellen told CNBC’s “Closing Bell: Overtime.”