The Congressional Budget Office (CBO) has expressed concern over a significantly greater risk of the US Treasury running out of funds in early June due to lower-than-expected tax receipts through April. In a recent post, CBO Director Phillip L. Swagel stated, "We now know that receipts from income tax payments processed in April were less than we anticipated in our latest baseline budget projections."
The statutory limit on the amount of debt that the Department of the Treasury can issue was reached on January 19, 2023. Since then, the Treasury has been using "extraordinary measures" to borrow additional funds without breaching the debt ceiling. In a previous report, the CBO projected that these extraordinary measures would likely be exhausted between July and September 2023. However, the recent shortfall in tax receipts has accelerated the exhaustion timeline.
Swagel also noted that the Internal Revenue Service (IRS) is expected to finish processing tax returns more quickly than last year due to several years of disruptions from the coronavirus pandemic. This, combined with lower tax receipts, means that "the Treasury’s extraordinary measures will be exhausted sooner than we previously projected."
The exact exhaustion date remains uncertain, as predicting the timing and amount of revenue collections and outlays in the coming weeks is challenging. If the debt limit is not raised or suspended before the extraordinary measures are exhausted, the government will be unable to pay its obligations fully, leading to delayed payments or a default on debt obligations.
Swagel concluded that the CBO will continue to monitor revenue collections and outlays, providing updates as more information becomes available, including an updated edition of their recurring report on federal debt and the statutory limit later this month.