The federal government is expected to run out of money to pay its debts in “early to mid-October,” the Congressional Budget Office announced Thursday. The deadline for Congress to lift the nation’s debt limit is approaching more quickly than expected, in part because the federal deficit is growing at a faster pace, Politico reports.
CBO estimates that the Treasury “will most likely run out of cash in early to mid-October”. It’s the first specific time frame for a debt ceiling increase from CBO, which had previously said only that the deadline would come “in the fall”.
That date could change, however, if there are major fluctuations in government spending and revenues over the next few months, the CBO warns. Until Congress tackles the politically tricky debt ceiling vote, the Treasury Department will use what are known as “extraordinary measures”, such as suspending certain investments, to make its payments.
The CBO report may offer some clarity to lawmakers on Capitol Hill, who have heard a range of time frames from government officials about the final deadline to raise the borrowing limit and avoid a devastating default, Politico adds.
Treasury Secretary Steven Mnuchin has urged lawmakers to take action before the August recess, though he later clarified that the federal government could keep paying its bills through September.
In a separate analysis released Thursday, CBO projected the U.S. budget deficit will reach $693 billion by this fall, its highest level since 2013. That shortfall is about $134 billion more than CBO’s most recent estimate in January.
The federal deficit is swelling this year as the government faces “surprisingly weak tax collections” as well as larger subsidies for programs like education and housing, the nonpartisan organization said.