- Thomson Reuters
Congress will need to raise the nation’s debt limit and avoid defaulting on loan payments by “early to mid-October,” the Congressional Budget Office said in a report on Thursday.
Treasury Secretary Steve Mnuchin has encouraged Congress to raise the limit before the legislative body leaves for its August recess.
But it remains unclear if lawmakers will be able to strike a bipartisan agreement allowing the limit to be raised, as both chambers continue to be weighed down by healthcare, tax reform, and trying to find an agreement to fund the government after the September 30 deadline.
The CBO said that the “extraordinary measures” being used by the Treasury could exhaust themselves before their projected date if the money coming into the department via tax receipts slows down or federal spending jumps unexpectedly.
If an agreement to raise the debt limit is not reached, it would be a disaster for the global economy.
The US would likely see its credit rating decline, making it more expensive for the government to borrow in the future. Additionally, studies by the Treasury department after the 2011 debt ceiling fight showed that even approaching a default had a serious negative impact on financial markets.