Government likely to hit debt limit this fall absent action from Congress: CBO

The federal government is likely to run out of borrowing room sometime in September or October if Congress doesn’t lift or suspend the debt limit before then, the Congressional Budget Office said Tuesday.

The new time frame is much later than some projections that had pegged the deadline for congressional action on the debt ceiling for sometime this summer — but sets up an even bigger shutdown showdown for the fall, since fiscal 2020 starts on Oct. 1.

“CBO projects that if the debt limit is not raised or suspended again after it is automatically reset on March 2, the Treasury will probably run out of cash near the end of fiscal year 2019 or early in fiscal year 2020,” CBO said.

As part of a budget deal approved last year, Congress agreed to suspend the debt ceiling through March 1, after which it will kick back in and tack on additional borrowing that accumulated in the interim.

The Treasury Department can use special measures to temporarily push off a potential breach and keep paying its bills, but CBO said it would probably run out of cash “near the end of this fiscal year or early in the next one” if the debt limit is unchanged.

“If that occurred, the government would be unable to pay its obligations fully, and it would delay making payments for its activities, default on its debt obligations, or both,” CBO said.

The government recently announced that the national debt now tops $22 trillion.

Of that total, about $16.2 trillion is debt “held by the public,” meaning it’s owed to entities outside the government. The rest is internal transfers between government accounts.