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Treasury, CBO blame low taxes for government running out of money ‘by early June’

Joe Biden

President Joe Biden may be under the gun to reach a deal with congressional Republicans and raise the debt ceiling, as warnings loom that the government is about to run out of money. Treasury Secretary Janet Yellen and the Congressional Budget Office (CBO) both cited lower-than-expected tax revenues as contributing factors.

In a letter to House Speaker Kevin McCarthy on Monday, Yellen wrote, “After reviewing recent federal tax receipts, our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time.”

The CBO released a similar sentiment. In a blog post on the official website, CBO director Phillip Swagel wrote: “Because tax receipts through April have been less than the Congressional Budget Office anticipated in February, we now estimate that there is a significantly greater risk that the Treasury will run out of funds in early June.”

“If the debt limit is not raised or suspended before the extraordinary measures are exhausted, the government will ultimately be unable to pay its obligations fully. As a result, the government will have to delay making payments for some activities, default on its debt obligations, or both” the post continues.

National Review reports that previously, “the CBO had projected that the nation would run out of funds at some point between July and September.” Additionally, “both Yellen and the CBO note that this projection is based on data currently available, but the actual date could vary if the underlying mix of revenues and spending materially changes.”