The Congressional Budget Office expects a US debt default in June
The Congressional Budget Office said on Friday that there is a “high probability” that the United States will default on its obligations within the first two weeks of June unless it raises the debt ceiling, and that uncertainty about payments will continue throughout May.
The nonpartisan agency’s new estimate is largely in line with Treasury Secretary Janet Yellen’s June 1 deadline for a potential default, underlining the urgency of settling the bitter standoff between Republicans and Democrats over raising the $31.4 trillion legal borrowing limit. dollar.
Negotiations are continuing between White House officials and aides to Republican and Democratic leaders in Congress, but a meeting scheduled for Friday on the public debt ceiling between President Joe Biden and senior lawmakers was postponed until next week.
The budget office report expressed hope for more negotiating time, saying the Treasury “maybe” could fund government operations until at least the end of July if available liquidity and extraordinary borrowing measures continued until June 15, when tax payments were due. Quarterly estimate.
On June 30, the Treasury Department will be able to obtain $145 billion through new exceptional borrowing measures by suspending investments in two government employee pension funds and health.
“The extent to which the government will be able to fund existing government operations will remain uncertain throughout May, even if treasury funds do not eventually run out until early June,” the budget office said in a statement.
The announcement of the OBO’s findings follows words from David Malpass, President of the World Bank, in which he stressed that the possibility of a US default adding to the problems facing the slowing global economy.
Malpass said, on the sidelines of the Group of Seven meeting in Japan, that this is happening at a time when the investments needed to increase production are declining, as a result of high interest rates and debt levels.
The bank’s president, who decided to relinquish his position at the end of next June, told Reuters: “This is clear. The crisis that the world’s largest economy is exposed to will negatively affect everyone.” He added, “The repercussions will be bad if this is not done,” referring to raising the US debt ceiling.
(Reuters, The New Arab)