US Government Faces ‘Significant Risk’ of Default in June, Congressional Budget Office Warns

The Congressional Budget Office (CBO) has pressured that “there is a significant risk that the Treasury will run out of funds at some point in the first two weeks of June” if the debt ceiling is just not raised or suspended. The CBO’s projection is according to the estimate by the Treasury Department {that a} U.S. default may happen on June 1.

CBO Sees ‘Significant Risk’ of the U.S. Defaulting in June

The Congressional Budget Office (CBO) launched an replace to the Budget Outlook for 2023 to 2033 Friday. The report updates CBO’s finances projections launched in February.

“CBO’s baseline projections are developed in accordance with procedures set in law. Those procedures require the agency to project spending, revenues, deficits, and debt without regard to the statutory limit on the issuance of new federal debt. That limit (now set at $31.4 trillion) was reached on January 19, 2023,” the report particulars, including:

CBO estimates that if the restrict is just not raised or suspended, there’s a vital threat that the Treasury will run out of funds in some unspecified time in the future within the first two weeks of June.

The CBO’s estimate aligns with that of U.S. Treasury Secretary Janet Yellen, who said earlier this month that the Treasury might not be capable to pay the entire authorities’s payments as early as June 1 “if Congress does not raise or suspend the debt limit before that time.”

Many folks have warned in regards to the implications of the U.S. defaulting on its debt obligations. The International Monetary Fund (IMF) mentioned there can be “very serious repercussions.” Federal Reserve Chair Jerome Powell warned of “uncertain and adverse” penalties. The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, expects “significant” and “lasting effects” on traders, issuers, and markets. Goldman Sachs believes the implications shall be “catastrophic.”

Meanwhile, former President and 2024 presidential candidate Donald Trump has urged Republican lawmakers to let the U.S. default on its debt if the Democrats don’t conform to spending cuts. “It’s better than what we’re doing right now because we’re spending money like drunken sailors,” he mentioned.

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