“The Treasury’s cash balance and those extraordinary measures would enable it to continue financing the government’s activities for a while,” the CBO said in a report that examined the federal debt and statutory limit. “However, if the debt limit remained unchanged, the ability to borrow using those measures would ultimately be exhausted, and the Treasury would probably run out of cash sometime in the first quarter of the next fiscal year (which begins on October 1, 2021), most likely in October or November.”
The CBO said the timing and size of revenue collections and outlays over the coming months could differ noticeably from its projections. But it was clear about one thing though: the government would be unable to pay its obligations fully, and it would delay making payments for its activities, default on its debt obligations, or both.
The caution came as Senate Minority Leader Mitch McConnell, who leads the Republican lawmakers opposed to Democrat President Biden, told the Punchbowl News portal that his party will not vote for a debt ceiling hike.
"I can't imagine there will be a single Republican voting to raise the debt ceiling after what we've been experiencing," said McConnell who added that trillions in new debt accumulated by the Biden administration since it came to office in January has not resolved US economic woes.
Democrat Senate Majority Leader Chuck Schumer, meanwhile, described McConnell’s remarks as "shameless, cynical and totally political," adding that the much of the current debt ceiling was accrued from the Trump administration’s borrowings during the height of the coronavirus crisis.
"This debt is Trump debt," Schumer was quoted as saying by CNN. "It's Covid debt. Democrats joined three times during the Trump administration to do the responsible thing and the bottom line is that Leader McConnell should not be playing political games with the full faith and credit of the United States. Americans pay their debts."
The CBO said as of June 30, the amount of outstanding debt subject to the statutory limit was $28.5 trillion, after an addition of $6.5 trillion borrowed by the Biden administration.