WASHINGTON -The United States risks defaulting on debt obligations as soon as July, if lawmakers fail to resolve a gridlock and raise the federal borrowing limit, according to Congressional Budget Office estimates Wednesday.
The forecast by the nonpartisan office serving Congress comes as Republicans threaten to block the usually rubber-stamp approval for raising the nation’s credit limit, if Democrats do not first agree to steep future budget cuts.
“If the debt limit remains unchanged, the government’s ability to borrow using extraordinary measures will be exhausted between July and September 2023,” said the CBO.
The latest estimate provides another benchmark on top of the Treasury Department’s expectations.
In January, the US hit its $31.4 trillion borrowing cap, prompting the Treasury to start measures that allow it to continue financing the government’s activities.
The Treasury earlier said its cash and “extraordinary measures” would likely last until early June.
“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 warned Wednesday.
“As a result, the government would have to delay making payments for some activities, default on its debt obligations, or both,” it added.
The final deadline remains uncertain and if collections fall short, the Treasury could run out of funds before July, the office said.