U.S. Debt-Limit Measures May Run Out in Late October, CBO Says
(Bloomberg) -- The U.S. Treasury is likely to exhaust its ability to borrow as soon as late October, according to the Congressional Budget Office, in the latest warning to lawmakers following their failed efforts to address the debt ceiling this week.
Barring an increase or suspension of the debt limit, the Treasury will run out of cash along with special measures to avoid a federal payments default by late October or early November, the nonpartisan CBO said in a report Wednesday. That echoes the calculation the CBO provided in July and compares with the Treasury’s estimate of Oct. 18, released by Secretary Janet Yellen on Tuesday.
A two-year suspension of the debt limit expired July 31, prompting Treasury to commence special measures -- including halting new investments into several federal employee retirement funds -- to conserve cash.
Once those measures to pay government debts are exhausted, the U.S. would enter a technical default and be forced to delay making payments to lenders. Yellen said Tuesday this would be “catastrophic” and could lead to a “financial crisis” and recession.
With Republicans attempting to force Democrats to use an involved parliamentary procedure to boost the debt limit on their own, a partisan impasse has been hit on the matter. Lawmakers also have to enact a stopgap spending bill to keep the federal government funded past the end of the fiscal year on Thursday, and avert a shutdown.
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