The U.S. Treasury will run out of cash in the first half of November if the federal borrowing limit isn't raised, the Congressional Budget Office said Wednesday in an updated estimate.
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The nonpartisan budget office moved up its forecast of how long the U.S. could pay its bills without an increase in the debt limit by several weeks due to a larger-than-expected budget deficit in September. Previously, the CBO said the Treasury would run out of cash between the middle of November and early December.
The latest CBO forecast largely mirrors the latest guidance from Treasury Secretary Jacob Lew. The Treasury has used so-called extraordinary measures since mid-March to remain below the federal borrowing limit, which is at $18.1 trillion.
Mr. Lew said it would no longer be able to use those emergency measures around Nov. 5, after which the government would fund operations with daily cash flow.
The CBO said Wednesday that if the debt limit isn't increased, the Treasury would run a very low cash balance in early November, and it would be depleted shortly after that. Failing to raise the debt limit would lead to delays in payments of government activities, a default on the government's debt obligations, or both, the CBO said.
Analysts at the Bipartisan Policy Center, a Washington think tank, have estimated the Treasury would run out of money between Nov. 10 and 19.
The debt limit has prompted increasingly bitter partisan fights in recent years that have gone down to the wire. Republicans have viewed the measure as one way to gain leverage and push for government spending cuts, but the White House says it won't negotiate on debt-limit increases.
Many lawmakers expect House Speaker John Boehner (R., Ohio) to find a way to approve a debt-limit fix before he retires from Congress. That departure could happen as soon as Oct. 30 but is contingent on Republicans selecting a new speaker first.
The White House is also in talks with Mr. Boehner and Senate Majority Leader Mitch McConnell (R., Ky.) over an agreement on spending levels for 2016 and possibly 2017. If they can come up with a way to raise spending caps set in law with offsetting cuts in entitlement spending, that could provide a vehicle for raising the debt limit and dispatching with two difficult political votes in one swoop.
Some Republicans have suggested Mr. Lew's notice that the debt ceiling would be hit by early November may have been politically motivated and designed to force resolution before Mr. Boehner leaves Washington. Both reports from the CBO and the BPC have shown no support for such claims.
By Nick Timiraos