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WASHINGTON — The Congressional Budget Office said Friday that tax revenue and emergency measures after June 15 “will likely allow the government to continue funding operations until at least the end of July.”
The update advice also reiterated the CBO’s earlier uncertainty about the debt ceiling in the first weeks of June. Although mid-June tax receipts could ease pressure on the Treasury through July, there is still a risk of default in the first weeks of June, the government’s top forecaster said.
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“If the debt ceiling 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 report said.
The new report came as White House and congressional leaders postponed a meeting scheduled for Friday to continue negotiations, citing little progress so far on any deal to cut spending and tying it to an increase. of the debt ceiling.
Learn more: Confused about the debt ceiling? Here’s what you need to know
“The extent to which the Treasury will be able to fund ongoing government operations will remain uncertain throughout May, even if the Treasury eventually runs out of funds in early June. This uncertainty exists because the timing and amount revenue and expenses in the interim weeks could differ from CBO projections,” the latest report said.
The CBO has also published a updated projection of the federal budget deficit for 2023, bringing it to $1.5 trillion.
The office warned that there was still “a great deal of uncertainty” surrounding the deficit figure, in part due to an expected Supreme Court ruling on President Joe Biden’s student loan forgiveness plan.
Legal experts have told CNBC that the nation’s top court is likely to overturn the $400 billion debt cancellation plan, given the court’s conservative majority.
If that happens, the administration will likely record the money it set aside for the loan forgiveness last year as a spending cut this year, the CBO reported.
The CBO is a nonpartisan federal agency that provides objective budget and economic data to Congress, usually to inform legislation.
Debt ceiling talks were postponed less than a day before Biden spoke with House Speaker Kevin McCarthy, R-Calif., Senate Minority Leader Mitch McConnell, R-Ky ., Senate Majority Leader Chuck Schumer, DN.Y., and House Minority Leader Hakeem Jeffries, DN.Y.
The meeting was expected to be the second this week, after a caucus on Tuesday produced no significant developments.
It was unclear Friday what impact, if any, the new report would have on talks currently underway at the staff level, between aides to the four congressional leaders and White House liaisons.
As the House and Senate prepared to leave for the weekend on Thursday, McCarthy said he didn’t see “seriousness” from the White House about a possible deal. “It looks like they want to default more than they want a deal,” the California Republican told reporters on Capitol Hill.
Democrats also seemed rooted, as Senate Majority Leader Chuck Schumer noted in a letter to his caucus on Friday, in which he said staff-level talks would continue in the coming days.
Yet even as the aides worked to find common ground, Schumer said Democratic senators would continue to “highlight the devastating impact” of cuts to the federal budget that are part of a bill passed by the House Republicans last month.
At the heart of the partisan impasse is the White House’s insistence that Congress vote to raise the debt ceiling without preconditions, and House Republicans’ demand that any increase in the debt ceiling be matched. to sweeping federal spending cuts and new work requirements for social safety net programs.
Failure to raise the debt ceiling before the United States runs out of available cash and emergency measures would spell “economic disaster”, Treasury Secretary Janet Yellen said Monday.
“This is something that could produce financial chaos, it would significantly reduce the amount of expenses and mean that Social Security recipients, veterans and people who rely on government money owed to them, contractors, we just wouldn’t have enough money to pay the bills,” Yellen told CNBC’s “Closing Bell: Overtime.”