U.S. Will Have No Way to Avoid Defaulting By Summer

TThe United States will have no other options to stop the government defaulting sometime in the summer between July and September. Congressional Budget Office projected Wednesday.

This deadline is longer than the one given by the Treasury DepartmentThis is June. The U.S. surpassed its debt ceiling Last month, the Treasury Department started “extraordinary measures” To avoid default. These measures basically involve shifting money around the government accounts to pay bills and not issue new debt.

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“The projected exhaustion date is uncertain because the timing and amount of revenue collections and outlays over the intervening months could differ from our projections. In particular, income tax receipts in April could be more or less than we estimate,” CBO pointed out.

If revenue falls short, the CBO warned that extraordinary measures could be exhausted earlier and that the Treasury may run out of money before July begins.

The eagerly awaited Wednesday report provided some insight into the most important showdown over the debt limit in approximately a decade. Republicans want to take advantage of the imminent date to get concessions from Biden’s administration. They are hoping to see spending cuts due to high inflation and high debts.

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According to the Committee for a Responsible Federal Budget, these so-called extraordinary steps have been used at most 16 times since their inception in 1985 and again as recently as 2021. In the history these fiscal showdowns, there has been no default by the U.S.

A default would be catastrophic for the economy. Economists urge lawmakers to raise the debt limit to stop such an event.