The U.S. Treasury can fund the government through early to mid-October under the current borrowing limit, the Congressional Budget Office said, giving lawmakers leeway to wait until after their summer recess to increase the debt cap despite pressure from the Trump administration to act sooner.
“However, the timing and magnitude of revenues and outlays over the next few months could vary noticeably from CBO’s projections, so those measures could be exhausted and the Treasury could run out of cash earlier or later than CBO projects,” the Washington-based organization said Thursday in a report.
While Treasury Secretary Steven Mnuchin has urged lawmakers to raise the debt limit as soon as possible, he’s said the government can finance itself through at least the beginning of September and that he’s not concerned about the impact of lower-than-expected tax revenue. The CBO said in March that it expected the government to exhaust its borrowing capacity sometime in the fall.
The Treasury Department has been relying on special accounting maneuvers since March to stay under the nearly $20 trillion current debt cap.
Mnuchin has called on Congress to pass a “clean” debt ceiling increase -- without any policy riders -- ideally before a five-week break that begins late next month. White House budget director Mick Mulvaney, backed by conservatives in the House, has suggested using the bill to try to force Democrats to accept spending cuts.
“I think that the Congress should raise the debt ceiling so that we don’t have to talk about prioritization, that’s really the focus,” Mnuchin said this month, referring to a choice the government would have to make on paying debts as a priority, above other obligations, to avoid a default. “We should be paying our bills when they’re due and we shouldn’t put the government at risk.”
In a separate report released Thursday, the independent office said the U.S. budget deficit in fiscal 2017 is projected to be $693 billion, wider than the previous projection of $559 billion. The gap in fiscal 2016 was $585 billion. The bigger shortfall reflects slow growth in revenue collection through May, a trend expected to continue the rest of the year, CBO said. The 2017 fiscal year runs through the end of September.
Revenue is estimated to be $3.3 trillion for the fiscal year that started Oct. 1, 2016. The CBO in January projected fiscal 2017 revenue at $3.4 trillion.
CBO projected the U.S. economy will expand 2.1 percent this calendar year, from a year earlier, rising from 1.6 percent in 2016. It forecast the unemployment rate will average 4.4 percent in 2017. The projections assume a continuation of current laws.
CBO will use the updated estimates as its yardstick for measuring the deficit, spending and revenue effects for the rest of the calendar year, including for evaluations of President Donald Trump’s budget and a planned tax-code overhaul. Trump has proposed slashing spending by $3.6 trillion over the decade but ultimately it’s up to Congress to decide on the federal budget.
Lawmakers normally use CBO’s projections in crafting the congressional budget resolution, leaving them unable to use inflated growth projections as the White House is able to do to project a balanced budget within 10 years.
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