The Bipartisan Policy Center (BPC), a Washington-based think tank and advocacy group, in its latest report has warned that the United States may default on government debt in the first half of September.
“The Bipartisan Policy Center now forecasts a risk that the debt limit ‘X Date’ — the date when the federal government can no longer pay all of its bills in full and on time — could occur in the first half of September”, the think tank said on Monday.
The report’s authors stressed that in July and August, the US Treasury would continue to spend funds on prioritised and emergency measures, but revenues for the 2019 fiscal year were rather low, with total revenue growth of less than 3 percent year-on-year. According to the report, lower than expected corporate income tax collections appear to be due to 2017 tax cuts.
Despite this, analysts believe that the most likely time of the default, if it occurs, is the beginning of October.
“All forecasts carry uncertainty, but given the potentially devastating economic consequences, it would be irresponsible for Congress to ignore this new forecast. The only way to take the possibility of default off the table this year is to pass a debt limit extension in the coming weeks”, BPC’s economic policy director, Shai Akabas, said.
According to data from the US Treasury Department, US government debt has grown by more than $2 trillion during Donald Trump’s presidency, reaching $21.974 trillion by early 2019.
According to the Congressional Budget Office (CBO), the US national debt amounted to 78 percent of GDP in 2018, the highest share since 1950. Additionally, it has been noted that the budget deficit jumped from 3.5 percent of GDP in 2017 to 3.8 percent of GDP in 2018.