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The federal government is facing a potential default that could occur as early as May, according to recent findings from the Congressional Budget Office.

The CBO’s latest analysis indicates that the Treasury Department might exhaust its ability to use “extraordinary measures” to continue paying the government’s bills between July and September. However, the report emphasizes that if tax revenues fall short of expectations in the coming months, this timeline could accelerate significantly, potentially leading to a default as soon as May.

The gravity of the situation has prompted the CBO to warn that the Treasury could run out of funds much sooner than initially anticipated. This development has added urgency to ongoing negotiations between President Biden and House Republicans regarding the debt ceiling.

At the heart of these discussions is the Republicans’ demand for substantial spending cuts in exchange for raising the debt ceiling. The White House, however, maintains its position that Congress should increase the borrowing limit without conditions, arguing that the debt ceiling has historically been raised dozens of times under both Democratic and Republican administrations.

The CBO’s projections have highlighted the critical nature of these negotiations, as a U.S. default would have severe repercussions for the global economy. Economic experts warn that such an event could trigger a financial crisis, leading to increased borrowing costs, market instability, and potential job losses.

The report’s findings have intensified pressure on lawmakers to reach a compromise, as the window for avoiding a default appears to be narrowing more rapidly than previously thought. This situation represents one of the most significant fiscal challenges facing the Biden administration and Congress in the current term.