The U.S. Government appears destined to default on its debts sometime this summer unless members of Congress agree to raise the federal debt limit.
So says Congressional Budget Office Director Phillip Swagel in announcing his agency’s most recent budget and economic outlook.
The Director noted that the country’s projected deficit for the next decade is some $3 billion larger than projected last spring, mainly, he asserted, “because of newly enacted legislation and changes to the economic forecast that boost costs and spending on mandatory programs.”
Noting that “as the cost of financing the nation’s debt grows, net outlays for interest increase substantially.” Swagel directly addresses the debt limit by predicting that if that limit remains unchanged, “the government’s ability to borrow, using extraordinary measures, will be exhausted between July and September 2023.”
Swagel said he could not be more specific regarding what he called a “projected exhaustion date” for the simple reason that “the amount of revenue collections and outlays over the intervening months could differ from our projections.”
To that end, the Director noted that “income tax receipts could be more or less than we estimate.” If those receipts end up being less than expected, the Treasury Department “could run out of funds before July.”
President Biden and House Speaker Kevin McCarthy have entered into preliminary discussions regarding the debt limit. According to various news sources, both parties have mentioned the possibility of reducing some spending programs, although cuts to either Social Security or Medicare are thought to be off the table.
By Garry Boulard
