![]() ![]() "We will not pass a clean debt ceiling," McCarthy said.īiden has said the debt limit needs to be raised without conditions. House Speaker Kevin McCarthy has said Republicans would not let the country default on its debt, but they want federal spending cuts in exchange for their votes. To default on the debt would lead to massive economic consequences at home and abroad, according to analysts. When the limit is reached, the Treasury can't borrow money to cover government expenses. It's a limit set by law that determines how much the federal government can legally borrow. The latest update comes as policymakers and President Joe Biden are negotiating to raise the debit limit, also called the debt ceiling. "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," Swagel said in a statement. The CBO also predicts "stagnant output, rising unemployment, gradually slowing inflation, and interest rates that remain at or above their levels at the beginning of the year – before the economy subsequently rebounds." The CBO also released its 10-year economic forecast.īased on current economic conditions, the CBO predicts a budget deficit $3 trillion larger than its May prediction mainly because of newly enacted legislation and mandatory spending on Social Security and Medicare, Swagel said. Stay in the conversation on politics: Sign up for the OnPolitics newsletter Economic outlook 2023 "On top of that, it is unlikely that the federal government would be able to issue payments to millions of Americans, including our military families and seniors who rely on Social Security," Yellen said. defaults, it would be "catastrophic," she said Tuesday at a National Association of Counties conference in Washington. Treasury Secretary Janet Yellen thinks she can use extraordinary measures to pay the bills until June 5. The consequences of default would impact all Americans, forcing higher home and auto loan rates and credit card payments, officials have warned. could run out of money before July.ĬBO will issue a new debt limit outlook in April after tax collections, office Director Phillip Swagel said Wednesday afternoon. If the country takes in less than expected, the U.S. The CBO blames the uncertain date on upcoming revenue collections, especially how much the U.S. can legally borrow – the "extraordinary measures" the Treasury is taking to pay America's bills will run out between July and September, the CBO said in a new report Wednesday afternoon.īut there is no "X-date" in the report to mark the threshold for when the U.S. If Congress doesn't raise the debt limit – the amount the U.S. Treasury will run out of money to pay government bills such as Social Security and military paychecks this summer, but there's no way to tell exactly what day yet, according to the nonpartisan Congressional Budget Office.
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