U.S. Could Run Out of Cash by May, Budget Office Predicts
The United States could end up without money to pay the bills by the end of May if the congress does not increase or suspend the limit of the nation’s debt, said the Congress Budget Office on Wednesday.
The provision exerts additional pressure on the Congress and the Trump Administration to deal with the loan limit, which limits the total amount of money that the United States is authorized to borrow to finance the government and satisfy their financial obligations. A prolonged defender by the end of the year could shake the markets and complicate the plans of President Trump to issue more tax cuts.
The CBO observed that its forecasts are subject to uncertainty on how many tax revenues will collect the federal government this year. He expects the United States to have sufficient funds to continue paying bills until August or September. However, he said that if the loan needs exceed his projections, the United States could end up in cash by the end of May or June.
“The expected exhaustion date is uncertain because the time and amount of the revenue and disbursement collections in the following months could differ from the Cbo projections,” said the budget office in a relationship.
The so-called X-Date is the moment when the United States are unable to pay bills, including payments of interest to investors who hold the government debt. Failure to comply with these obligations could entail the unprecedented of the United States on its debt. The United States have never failed its debt, which is considered one of the safest investments in the world, and Brinkmanship on the missed payments could be economically harmful.
National debt is approaching $ 37 trillion. Legislators agreed in June 2023 to suspend the debt limit of $ 31.4 trillion until 1 January 2025.
Janet L. Yellen, The Treasury Secretary under President Joseph R. Biden Jr., told Congress in mid -January that the Treasury Department should Start using “extraordinary measures” on January 21 to allow the United States to continue to respect their financial obligations.
Those measures are Essentially accounting manuvers This can prevent the government from violating the debt limit. They can include the suspension of some types of investments in savings plans for government employees.
But in the end the treasure will run out those maneuvers and the debt limit must be revoked or suspended so that the federal government continues to finance its obligations
Since the Federal Government issues budget deficits – which means that it spends more than it carries through taxes and other revenue – he must borrow huge sums of money to pay his bills. These obligations include funding for social security network programs, salaries for members of the armed forces and paying investors who have purchased the debt of the United States government in exchange for interest payments.
The Republicans cut federal work at government agencies and expressed their commitment to curb the expenditure. But it is unlikely that these efforts make a large part of an embodiment since the largest debt drivers are programs of social security networks such as medicating and social security. Legislators showed little appetite for cutting those politically popular programs.
Before entering in office this year, Trump asked for the abolition of the debt limit and warned that it was a trap left by the Democrats derail his agenda.
The estimate of the CBO follows a projection at the beginning of this week by the Bipartisan Policy Center, in which it is stated that the United States could end in cash between mid -July and early October.
The disorders at the Internal Revenue Service – including the push of thousands of test employees – blocked audit and hindered its efforts to collect taxes, according to agencies officials, raising concerns that the government could collect less tax revenues this year.
The Treasury Secretary Scott Besent told a legislator this month that he intends to provide the congress with an X-Date forecast in May.
