Report warns of a high likelihood of US Treasury running out of funds soon

US Government at “Significant Risk” of Default on Financial Obligations

The United States government is facing a “significant risk” of being unable to meet all of its financial obligations as early as June, according to a recent report by the Congressional Budget Office (CBO).

CBO Predicts Risk of Default on US Debt

The report, published on May 12, 2023, highlights the risk of the US government defaulting on its debt in the near future, which stems from having reached its statutory debt limit of $31.4 trillion on January 19, 2023.

The CBO predicts that if the debt limit remains unchanged, the government could be in trouble 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.”

CBO’s Projections for Federal Budget Deficit

The CBO predicts that the federal budget deficit will be $1.5 trillion in 2023, which is $0.1 trillion more than the initial estimation in February. The ongoing Supreme Court case regarding the cancellation of outstanding student loan debt could also have a significant influence on the total revenue for 2023.

Furthermore, 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.

CBO’s Projections for Deficit Growth and National Debt

Based on its projected data, the CBO does not expect a decrease in the growth of the deficit anytime soon. In fact, it was predicted that the annual deficits will “nearly double over the next decade,” reaching $2.7 trillion in 2033. The CBO predicts that 2033 will witness the highest level of national debt ever documented in the US.

The report stated, “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 – which would be the highest level of US debt ever recorded.”

Conclusion

The CBO’s report highlights the significant risk that the US government faces regarding its financial obligations. The ongoing Supreme Court case regarding the cancellation of outstanding student loan debt and a shortfall in tax receipts could further contribute to the financial burden. The government must take action to address the growing deficit and avoid a potential default on its debt.