The federal budget deficit is set to surge to $1.54T this year, the Congressional Budget Office estimated in a report dated Friday. That’s up from the $1.41T estimate that the nonpartisan agency laid out in February.
The CBO also reaffirmed it sees “significant risk” that the Treasury Department will run out of cash in the first two weeks of June unless Congress raises the $31.4T federal debt limit. Should cash last until June 15, it said, the U.S.’s so-called X-date could be pushed to the end of July.
Treasury Secretary Janet Yellen warned at the beginning of May that the Treasury could run out of cash and extraordinary measures to pay the government’s bills as early as June 1. Biden wants Congress to raise the borrowing limit, but House Republicans have said they will not do so if spending cuts are not agreed upon.
Debt-ceiling talks between President Joe Biden and congressional leaders are expected to take hold early next week.
The $130B boost in the CBO’s estimate for the U.S. budget shortfall took into account a number of factors, including: $71B more in outlays for student loan programs; $33B more in outlays for deposit insurance accounts; and $23B in higher interest costs.
For April, the Treasury’s monthly statement showed that the U.S. government took in $176B more than it spent as tax receipts rolled into the government’s coffers.
More on the U.S. Economy