The Congressional Budget Office (CBO) has released a report titled “Federal Debt and the Legal Boundary” which states that the US government will face a “significant risk” of defaulting on its debts in the first two weeks of June if the debt limit is not increased or suspended. The report warns that the government may have to delay payments or fail to fulfill its debt obligations if the debt limit remains unchanged. However, the Treasury can finance government operations until at least the end of July if its cash and emergency measures are sufficient to finance the government by June 15.
The report emphasizes that until the law to raise or suspend the debt limit is passed, the Treasury should use its cash balance and current extraordinary measures to finance ongoing government activities. The government will need close to $2.2 trillion by the end of Fiscal Year 2023 and the financing need for May and June is estimated to be between $200 billion and $300 billion, and $75 billion and $100 billion, respectively. The report also notes that the US government will likely require between $1.9 trillion and $2.2 trillion to finance its operations by the end of Fiscal Year 2023.
In another report, the CBO revised its budget deficit forecast for Fiscal Year 2023, increasing it by $130 billion compared to previous estimates in February, to $1.5 trillion. The report highlights the urgent need for the US government to address its mounting debt and fiscal challenges to avoid a potential debt crisis.