The US would fall into default at the beginning of June if there is no agreement on the debt ceiling

The United States could find itself in default starting in early June, if an agreement is not reached between Democrats and Republicans to raise the debt ceiling, the Congressional Budget Office (CBO) warned this Friday.

The CBO, a politically independent service responsible for providing Congress with fiscal and economic analysis, I had estimated before that this was likely to happen between July and September. For its part, the Treasury Department has already mentioned the date of June 1 for a possible default of the world’s largest economy, an unprecedented situation.

According to the CBO’s forecast, “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 Treasury’s ability to fund ongoing government operations will remain uncertain through May, even if the Treasury finally runs out of funds in early June,” he said.

The CBO notes that “additional extraordinary measures” and end-of-quarter tax receipts could allow the government to “finance its operations until at least the end of July.” The debt of the largest economy in the world reached 31 trillion dollars on January 19a figure from which the country can no longer issue new loans to finance itself.

Temporary emergency measures have been taken to continue paying. Democrats and Republicans are at odds on this issue and for the moment the Republican opposition refuses to raise the debt ceiling without concessions. A meeting between President Joe Biden and Republican leaders in Congress is scheduled for early next week at the White House.

“If the borrowing limit were not raised or suspended, the Treasury would not be authorized to issue additional debt,” the CBO detailed.

This would result in “late payments for certain government activities, default on government debt obligations, or both,” said the CBO, which estimates a potentially disastrous impact on the global economy.

“Such actions could lead to distress in credit markets, disruptions to economic activity, and rapid interest rate hikes for the Treasury,” the report said.


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