The Congressional Budget Office (CBO) on Wednesday said the US treasury department will exhaust its ability to pay all its bills sometime between July and September, unless the current $31.4tn cap on borrowing is raised or suspended.
In a report issued alongside its annual budget outlook, the non-partisan CBO cautioned that a historic federal debt default could occur before July if revenue flowing into the treasury in April – when most Americans typically submit annual income tax filings – lags expectations.
The pace of incoming revenue, coupled with the performance of the US economy in the coming months, makes it difficult for government officials to predict the exact “X-date”, when the treasury could begin to default on many debt payments without action by Congress.
“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 CBO report said. “As a result, the government would have to delay making payments for some activities, default on its debt obligations, or both.”
