The United States government faces a “significant risk” of no longer being able to meet all of its financial obligations as early as June, as per a recent report.
According to a May 12 report published by the U.S. Congressional Budget Office (CBO), the risk of the U.S. government defaulting on its debt in the near future stems from having reached its statutory debt limit of $31.4 trillion, on Jan 19.
The CBO predicts that if the debt limit remains unchanged, the U.S. government could be in hot water as early as June. It noted:
“CBO projects that if the debt limit remains unchanged, there is a significant risk that at some point in the first two weeks of June, the government will no longer be able to pay all of its obligations.”
The CBO currently predicts the federal budget deficit will be $1.5 trillion in 2023, which is $0.1 trillion more than it estimated in February.
CBO’s Budget Outlook, May 2023 Update. Source: Congressional Budget Office
It was emphasized that the outcome of the ongoing Supreme Court case regarding the cancellation of outstanding student loan debt could have a significant influence on the total revenue for 2023.
A shortfall in tax receipts recorded through April was also noted as having the potential to contribute to a larger deficit than initially predicted, the report noted.
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However, based on its projected data, the CBO does not anticipate a decrease in the deficit in the immediate future – in fact, it is predicted that the annual deficits will “nearly double over the next decade,” reaching $2.7 trillion in 2033.
CBO predicts that debt held by the public will also increase over the next ten years. It was noted:
“As a result of those deficits, debt held by the public also increases in CBO’s projections, from 98 percent of GDP at the end of this year to 119 percent at the end of 2033.”
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