The Congressional Budget Office (CBO) on Wednesday forecasted that the Treasury Department would most likely run out of cash in October or November absent congressional action on the debt limit.
The estimate comes as Republicans are saying they won’t help Democrats to raise the debt ceiling and suggests that lawmakers have only a few months to pass an increase or suspension of the limit before a default would occur.
A two-year suspension of the debt limit is set to expire at the end of the month, and after that time Treasury can take “extraordinary measures” for a period of time to continue borrowing fund without violating the debt ceiling.
The CBO estimated in a report that “unless the debt limit is increased, the Treasury, after using all available extraordinary measures, will probably be unable to make its usual payments starting sometime in the first quarter of the new fiscal year, most likely in October or November, although an earlier or later date is possible.”
“After that point, the debt limit would cause delays of payments for government activities, a default on the government’s debt obligations, or both.”
Senate Minority Leader Mitch McConnell (R-Ky.) told Punchbowl News this week that Republicans won’t back raising the debt limit, and he urged Democrats to add an increase in the ceiling to a spending bill that they can pass without any GOP votes. But it’s unclear whether Democrats will be able to pass their spending package before Treasury would exhaust the extraordinary measures.
Democrats blasted McConnell’s comments, arguing that it is irresponsible to oppose the U.S. paying its debts.