The US federal government would not be able to pay all its bills in full or on time if the debt limit is not raised in October, according to a report released by a think-tank. “Federal revenues have thus far grow slower than projected for the year by the Congressional Budget Office, but the under-performance has not been large enough for BPC to change its ‘X Date’ range at this time,” the Bipartisan Policy Centre (BPC), a Washington D.C.-based think tank, said in the report on Monday. “Within our range, October 2 is one particularly risky day, when a large payment is due to the military retirement trust fund,” the BPC said, adding there’s also a chance that the US federal government could run out of cash before the October to November range.
In such a case, “policymakers who wish to ensure that the government does not miss or delay any payments would have limited time in September to enact legislation,” the BPC noted, urging policymakers to raise the debt limit sooner rather than later given substantial uncertainty. US Treasury Secretary Steven Mnuchin last month urged Congress to raise the debt limit before its August recess to avoid a potential federal government default, but he did not say when the government would run out of cash.
The Treasury has begun using book-keeping maneuvers to continue to finance the government’s activities since the federal government’s outstanding debt reached its statutory limit on March 15. “Eventually, if policymakers do not act to raise or suspend the limit, those measures and the Treasury’s remaining cash on hand will be exhausted,” the BPC said. The debt limit is the maximum amount of debt that the Treasury can issue to the public and to the other federal agencies. The amount of outstanding debt subject to limit has now risen to about $19.9 trillion.