The Congressional Budget Office (CBO) on Wednesday said the Treasury Department will most likely run out of cash in the first half of March if Congress doesn’t raise or suspend the debt limit before then.
The nonpartisan budget scorekeeper had estimated in November that the debt-limit deadline would be in late March or early April. But the CBO moved up its projected deadline as a result of the tax-cut law President Trump signed in December.
“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,” CBO said in a report. “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.”
Congress had suspended the debt limit though Dec. 8, but the ceiling was reinstated after that. Since the debt limit has been reinstated, the Treasury Department has been using “extraordinary measures” that allow it to continue to borrow funds for a short period of time.
The CBO is predicting that the extraordinary measures will be exhausted in the first half of March, though it could happen at an earlier or later date. If the Treasury Department runs out of cash, the government would delay payments, default on its debt or both, the CBO said.
Treasury Secretary Steven Mnuchin urged lawmakers Tuesday to raise the debt ceiling as soon as possible. But votes on the debt limit have been tough for Republicans in the past, because they have sought to pair increases in the limit with cuts in spending.
House Minority Leader Nancy Pelosi (D-Calif.) blasted the tax law following CBO’s report.
“Already, the dire effects of the GOP Tax Scam’s giveaways are being exposed,” she said in a statement. “Far from paying for itself, as Republicans promised, the GOP’s fevered push to pad the pockets of corporations and the wealthiest one percent is exploding the deficit.”
Updated: 5:01 p.m.