U.S. Faces Looming Debt Crisis, CBO Warns of Exhaustion by 2023
The is facing a looming debt crisis, with the Congressional Budget Office (CBO) warning that the government’s ability to borrow using “extraordinary measures” will be exhausted between July and September 2023.[0] If the debt limit is not raised or suspended before then, the government would be unable to pay its obligations fully, meaning it would have to delay payments for some activities, default on its debt obligations, or both.[1]
The CBO estimates that the annual total budget deficit will double from $1.41 trillion in 2023 to $2.851 trillion in 2033, with debt held by the public projected to rise from 98% of GDP in 2023 to 118.2% of GDP in 2033.[2] The debt could skyrocket to 195 percent of GDP by 2053, thanks to growing interest costs and increased mandatory spending on programs like Medicare and Social Security.[3]
On January 19th, the United States officially reached the maximum amount of debt it can carry, prompting the Treasury Department to start using extraordinary measures – economical strategies designed to delay the government's inability to pay its debts.[4] Janet Yellen, the Secretary of the Treasury, has utilized extraordinary measures of accounting to guarantee that the federal government is able to pay all of its bills in a timely manner. However, according to the Congressional Budget Office's examination, these measures will likely expire between the months of July and September.[5]
Thus far, House Republicans and the White House have not been able to reach an agreement concerning the debt ceiling.[6] Republican legislators are insisting that spending must be reduced in order to increase the debt ceiling, while Vice President Biden is asking the GOP to talk about decreasing expenses without making the debt ceiling a bargaining chip.[6]
On Wednesday afternoon from Lanham, MD, President Joe Biden announced that the budget request he is set to release on March 9 will reduce the deficit by $2 trillion within the next 10 years. He declined Republican requests to link the debt limit and federal spending talks.[5]
The Congressional Budget Office (CBO) anticipates “tepid economic growth, an increase in joblessness, gradual slowing of inflation, and interest rates staying the same or higher than when the year began – before the economy eventually recovers.”[7] The Congressional Budget Office (CBO) estimates that due to Federal Reserve's interest rate rises, real economic growth will cease by 2023.[6] Inflation is anticipated to decrease in 2021, and the unemployment rate is anticipated to increase until the beginning of 2024, due to the economic growth deceleration.[6]
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0. “What Is Pushing the National Debt to Its Limit?” The Wall Street Journal, 15 Feb. 2023, https://www.wsj.com/articles/what-is-pushing-the-national-debt-to-its-limit-e93a1e69
1. “US could face debt-ceiling crisis this summer without deal, CBO warns” FXStreet, 15 Feb. 2023, https://www.fxstreet.com/news/us-could-face-debt-ceiling-crisis-this-summer-without-deal-cbo-warns-202302152257
2. “US national debt to rise by $20 trillion over the next 10 years: CBO” Fox Business, 15 Feb. 2023, https://www.foxbusiness.com/politics/us-national-debt-rise-20-trillion-over-next-10-years-cbo
3. “Deficit set to hit $1.4T this year amid persistent inflation, federal experts say” POLITICO, 15 Feb. 2023, https://www.politico.com/news/2023/02/15/inflation-persist-until-2026-federal-experts-00083033
4. “Debt ceiling: CBO finds government could be at risk of default ‘between July and September'” Yahoo News, 15 Feb. 2023, https://news.yahoo.com/debt-ceiling-cbo-finds-government-could-be-at-risk-of-default-between-july-and-september-193301099.html
5. “U.S. likely to default on debt between July and September unless Congress acts, CBO says – New Hampshire Bulletin” New Hampshire Bulletin, 15 Feb. 2023, https://newhampshirebulletin.com/2023/02/15/u-s-likely-to-default-on-debt-between-july-and-september-unless-congress-acts-cbo-says/
6. “Congress needs to act soon to avoid catastrophic US debt default, CBO report warns” CNN, 15 Feb. 2023, https://www.cnn.com/2023/02/15/politics/debt-ceiling-default-cbo-congress/index.html
7. “U.S. deficits are set to surge over next decade, Congressional Budget Office says” Axios, 16 Feb. 2023, https://www.axios.com/2023/02/15/cbo-deficit-debt-ceiling-2023
