The CBO cautions that the US government might face difficulties in fulfilling its financial obligations this month.

The Congressional Budget Office (CBO) has issued a warning of a “significant risk” of the US defaulting on its payment obligations within the first half of June unless there is an increase in the debt ceiling.

The impartial budgetary agency also cautioned that the feasibility of payment operations throughout May remains unclear.

The CBO noted: “Even if the Treasury exhausts funds by early June, the capacity to finance the government’s ongoing operations will be uncertain throughout May.” This uncertainty arises due to potential variations in revenue collections and outlays during this timeframe, which may not align with the CBO’s estimates.

The CBO further mentioned that provided cash on hand and extraordinary borrowing measures can last until June 15 – when quarterly estimated tax payments are due – the Treasury could “likely” sustain government operations until at least late July.

By suspending investments in two government employee retirement and health funds, the Treasury could utilize $145bn in new extraordinary borrowing measures as of June 30.

These warnings arrive amidst an ongoing fierce dispute between the Republicans and Democrats over increasing the $31.4 trillion statutory borrowing limit. While negotiations among White House officials, congressional Republicans, and Democrats persist, a debt limit meeting scheduled for Friday between President Joe Biden and US lawmakers has been delayed until next week.

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