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- The nonpartisan Congressional Budget Office projected the US could run out of money in early June.
- That projection tracks with Treasury Secretary Janet Yellen's warnings on when the US could default.
- Congress can step in and prevent the crisis, but so far Republicans and Democrats are still sparring.
The US just got another sign of an imminent economic catastrophe if Congress fails to raise the debt ceiling this month.
On Friday, the nonpartisan Congressional Budget Office (CBO) projected that there is "significant risk" the US could default on its debt in the first two weeks of June if the debt ceiling is not raised by then.
"If the debt limit is not raised or suspended before the Treasury's cash and extraordinary measures are exhausted, the government will have to delay making payments for some activities, default on its debt obligations, or both," the CBO wrote in its projection.
That estimate tracks with a warning from Treasury Secretary Janet Yellen, who has said that the country could default as soon as June 1 without Congressional intervention. Mark Zandi, the chief economist at Moody's Analytics, previously told Insider that his projected X-date falls on June 8, with a best-case scenario of August 8.
So far, though, Congress seems to be running up the clock as Republicans and Democrats spar over how to avert a preventable catastrophe. President Joe Biden met with top congressional leaders on Monday in an attempt to reach an agreement on avoiding that outcome, but Speaker of the House Kevin McCarthy emerged from the meeting telling reporters that there was not "any new movement" on the issue.
However, multiple reports have suggested progress is being made in those negotiations. The top lawmakers were expected to meet with Biden again on Friday to discuss the debt ceiling, but the meeting was reportedly postponed to give staffers more time to chat on potential areas of compromise. For example, as Politico reported, there could be agreement on rescinding unspent pandemic funds and reforming energy permitting in an eventual deal.
The White House has warned that prolonged default could trigger a recession on par with the Great Recession — but the government wouldn't have the money to step in and cushion the crisis. Even a short breach would mean the loss of nearly a million jobs and a mild recession by the end of the year, according to Moody's Analytics. A default would also cost Americans tens of thousands in retirement savings, and make student-loan and mortgage payments more costly, according to the Joint Economic Committee.
The majority of lawmakers on both sides of the aisle have been clear that defaulting on the nation's debt is not an option, and Congress needs to act to ensure the government can continue paying its bills.
"I think that default would be catastrophic for the US and the world economy and it is deeply irresponsible to threaten financial cataclysm as a legislative tactic," Georgia Sen. Jon Ossof previously told Insider.