GOP lawmakers are demanding spending cuts in exchange for raising the debt ceiling, while Biden is calling on Republicans to negotiate on reducing spending without holding the debt ceiling hostage. House Republicans and the White House have not yet found much common ground to settle their standoff over the borrowing cap. In a letter to House Speaker Kevin McCarthy last month, Treasury Secretary Janet Yellen said that the measures would last through June 5, but that estimate is subject to “considerable uncertainty.” The actions are mainly behind-the-scenes accounting maneuvers. The US hit the debt ceiling set by Congress on January 19, forcing the Treasury Department to start taking extraordinary measures to enable the federal government to keep paying its bills on time and in full. “Over the long term, our projections suggest that changes in fiscal policy must be made to address the rising costs of interest and mitigate other adverse consequences of high and rising debt,” Phillip Swagel, the CBO’s director, said in a statement. It expects inflation to decline this year and the unemployment rate to rise through early 2024, reflecting the slowdown in economic growth. In addition, the CBO estimates that inflation-adjusted economic growth “comes to a halt” in 2023 because of the Federal Reserve’s interest rate hikes. The country’s financial picture has worsened largely because of increased federal spending, approved by both parties, and higher interest rates. The agency also released its 10-year budget and economic outlook, in which it projected major increases in federal budget deficits and debt over the next decade. But House Republicans and President Joe Biden have made little progress so far in resolving their differences on dealing with the budget cap. The CBO’s report is yet another warning to Congress that it needs to act soon to avoid a catastrophic default. At that point, the agency may be able to narrow down a more specific time frame. The CBO expects to revisit its projection in May after the current tax filing season closes and it has a clearer picture of how much federal tax revenue will come in this year. For instance, if income tax receipts in April come in lower than expected because of last year’s stock market downturn, the extraordinary measures may be exhausted sooner, and the government could run out of funds before July. However, the CBO stressed in its report that its projection is uncertain because the timing and amount of revenue collected and money spent could differ from its estimates. That’s when the agency expects the Treasury Department will exhaust its ability to borrow additional funds using extraordinary measures. The federal government will be unable to fully pay its obligations sometime between July and September if Congress doesn’t address the debt limit before then, the Congressional Budget Office said Wednesday.
0 Comments
Leave a Reply. |