As the administration, the Democrats in Congress and Republican lawmakers play a game of chicken over the federal budget and how it should be funded, the Congressional Budget Office (CBO) reports that if the impasses continue, the United States will run out of money in early March.
Earlier estimates by the CBO put the date a few weeks later.
In an analysis titled “Federal Debt and the Statutory Limit, January 2018,” the nonpartisan agency reported:
CBO projects that if the debt limit remains unchanged, the ability to borrow using extraordinary measures will be exhausted and the Treasury will most likely run out of cash in the first half of March 2018. 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.
Its experts admitted that tax collections and moves by the Treasury to restrain spending could move the date forward or back.
It has been less than two weeks since the Republicans and Democrats cut a deal fund the federal government. As that deal was cut, a three-day shut down ended. The deal was tied to an agreement to vote on new rules for the status of undocumented residents. The vote is expected within several days.
It is too early to say whether the CBO warning will affect lawmaker debate on the budget at all. Congress and the White House already have shown they are prepared not to heed warnings about dire government financial conditions. And the parties will be faced with the contentious fight about whether to raise the federal debt ceiling, which has been the source of conflict for years.
The urgency of the decision to raise the debt ceiling has been brought on to a large extent by the new tax laws, the CBO reported:
Because the tax legislation reduced individual income taxes for most taxpayers, the Internal Revenue Service released new income tax withholding tables for employers to use beginning no later than the middle of February 2018. As a result of those changes, CBO now estimates that, starting in February, withheld amounts of individual income taxes will be roughly $10 billion to $15 billion per month less than anticipated before the new law was enacted. Consequently, withheld receipts are expected to be less than the amounts paid in the comparable period last year. In addition, the government ran a deficit of $23 billion in December, and it normally runs a deficit in the second quarter of the fiscal year.
Congress and the administration were able to agree on the tax law, but the decision had the unintended consequence of making the government lower on money than expected and immediately facing a funding crisis.