Congress Has Mere Months To Address Debt Default, CBO Warns

The U.S. government has until August or September to lift the country’s borrowing limit to avert a default on its $36 trillion-and-counting debt, according to the Congressional Budget Office’s (CBO) projections released Wednesday morning.

The nonpartisan forecast sets a deadline for Congress to address the statutory debt limit before the government runs out of money to pay its bills. Congressional Republicans are attempting to raise the debt limit through a filibuster-proof tax and spending package, circumventing Democratic lawmakers from potentially using debt limit negotiations as a point of leverage.

The Department of Treasury has been extending the deadline through so-called extraordinary measures since Jan. 1 and has “no room to borrow under its standard operating procedures,” according to the CBO report.

The U.S. government runs a deficit of roughly $2 trillion annually, forcing the Treasury Department to routinely borrow money.

The CBO also warned that the U.S. government could breach its debt limit as early as late May if tax revenue collection is lower than expected.

“The projected exhaustion date is uncertain because the timing and amount of revenue collections and outlays over the intervening months could differ from CBO’s projections,” the CBO stated in a four-page report. “If the government’s borrowing needs are significantly greater than CBO projects, the Treasury’s resources could be exhausted in late May or sometime in June, before tax payments due in mid-June are received or before additional extraordinary measures become available on June 30.”

Senate Majority Leader John Thune told reporters Tuesday that Senate Republicans will seek to include a statutory debt limit increase in a forthcoming budget reconciliation bill, which President Donald Trump notably supports.

However, some deficit-concerned GOP senators are balking at incorporating a debt limit increase without steeper spending cuts.

“We’ve got to keep that leverage, because obviously people in my own party aren’t serious about a reasonable spending level,” Republican Wisconsin Sen. Ron Johnson told reporters Tuesday.

“We’re continuing to discuss with all of our members the issues so we can do all of the things that the president has requested,” Senate Majority Whip John Barrasso told reporters Wednesday in response to a question about GOP lawmakers pushing for additional spending offsets in exchange for their support for a debt debt ceiling hike.

The initial House budget resolution included a $4 trillion hike in the debt limit and $1.5 trillion floor in spending cuts. Speaker Mike Johnson told reporters that including a debt ceiling hike in a forthcoming tax and spending package is “everybody’s preferred outcome at this point.”

Trump called for Congress to permanently suspend the debt limit in December following his election victory. Democratic lawmakers, including Massachusetts Sen. Elizabeth Warren, agreed with the president’s proposal

He also criticized congressional Republicans for not raising the debt limit increase before he took office, arguing “it was Biden’s problem, not ours.”