After that point, the debt limit would cause delays of payments for some government activities, a default on the government’s debt obligations, or both, a CBO report attached to the release said.
“CBO projects that, if the debt limit remains unchanged, the Treasury’s ability to borrow using extraordinary measures will be exhausted, and it will most likely run out of cash near the end of October or the beginning of November,” the congressional agency said in a press release on Wednesday.
Treasury Secretary Janet Yellen has told lawmakers that without an increased debt limit the United States will run out of ways to pay its bills around October 18.
The debt limit is one of two budget-related crises confronting the United States, the other being the need to pass a stop-gap spending measure that will allow the Treasury Department to continue paying bills after midnight on Thursday, the beginning of fiscal year 2022.
Negotiations on the debt ceiling between Democrat lawmakers and their Republican rivals have dragged on for months with no immediate solution in sight. The two sides have squared off regarding the debt limit several times over the past decade and even briefly allowed the United States to surpass it during the Trump administration, although the country itself has never defaulted on its debt.
Republicans have accused Democrats of wasteful spending and say extending the debt ceiling will put the United States further down a debt path of no return. They have tied the raising of the debt limit, which is to pay everyday bills like social welfare, to President Joe Biden’s more ambitious $4 trillion infrastructure rebuilding plan that his administration says will be funded partly by higher taxes on wealthy Americans.
On Wednesday afternoon, the US House of Representatives looked likely to authorize spending in the new fiscal year - a measure that analysts said should sail through the Senate. Without a stop-gap spending measure, the US government would shut down on Friday.
In contrast, the debt limit does not authorize any spending.
“Both parties share a responsibility for lifting the debt ceiling,” Yellen said.
She has warned lawmakers against acting at the last minute on the debt limit to prevent serious harm to business and consumer confidence from the risk of a negative credit rating for the United States.