The United States is facing a “significant risk” of running out of cash in June, according to a report from the Congressional Budget Office (CBO). The CBO warned that the Treasury Department’s ability to borrow money could be exhausted as soon as this summer, which could trigger a financial crisis.
The CBO report noted that the government’s borrowing limit, or debt ceiling, was reinstated on March 1, 2021, after being suspended for two years. The Treasury Department has been using “extraordinary measures” to prevent a default on the national debt, but those measures will likely be exhausted in the coming weeks.
If Congress does not raise the debt ceiling, the Treasury Department would not be able to borrow more money to pay the government’s bills, including interest on the national debt, Social Security benefits, and salaries for government employees. This could lead to a default on the national debt, which could have severe consequences for the global economy.
The CBO report states that if the debt ceiling is not raised and the Treasury Department exhausts its extraordinary measures, the government would be unable to pay all of its bills in full and on time. This could lead to delays in payments to contractors, vendors, and other entities that provide goods and services to the government.
The report also notes that a default on the national debt would increase the government’s borrowing costs, which would increase the deficit and add to the national debt. It could also cause a significant increase in interest rates, which could harm economic growth and job creation.
The Treasury Department has called on Congress to raise the debt ceiling, noting that failing to do so would have catastrophic consequences for the economy. However, some members of Congress have opposed raising the debt ceiling, arguing that it would lead to further government spending and contribute to the national debt.
The situation remains uncertain, but it is clear that Congress must act soon to raise the debt ceiling and prevent a potential financial crisis. The consequences of inaction could be severe, not just for the United States, but for the global economy as a whole.