In a jarring report drafted by the Congressional Budget Office released on Thursday, it has been established that there is a considerable probability that the federal government may run out of cash by mid-October if debt limits remain as they are.

In March earlier this year, the federal debt limit had been capped at $19.8 trillion after briefly being suspended; this procedure may have to be repeated in order to avoid defaulting on debt obligations or incur slow processing of payments for government-funded programs.

The CBO estimates that if standard laws remain as they are over the next decade or so, the nation's budget deficit would only widen in proportion to the rapidly accelerating GDP which could result in a federal deficit of $693 billion for the fiscal year. Note that this value constitutes 3.6% of existing GDP, rendering it the greatest budget deficit in 4 years. One reason for the considerable increase in the deficit is the fact that collection of tax revenue has been significantly lesser this year, something that can be attributed to the change in presidency as well as shrinking small businesses and the long periods of time common Americans are taking to file their taxes.

© USCapitol / Flickr.com

However, there is a caveat that exists: as per statute, the CBO's 10-year projections entail the assumption that current laws in regard to taxes and spending will remain unchanged. This implies that the forecasts are not the be all end all of the economy but rather serve as standard measures against which to weigh the pros and cons of policy decisions, particularly those in relation to taxation and corporate law.

The CBO's report, entitled "An Update to the Budget and Economic Outlook: 2017 to 2027" stated that "The Congressional Budget Office projects that if the debt limit remains unchanged, those measures will be exhausted and the Treasury will most likely run out of cash in early to mid-October." "The government would then be unable to pay its obligations fully, so it would have to delay making payments for its programs and activities, default on its debt obligations, or both."

© Obama White House / Flickr.com

Further worsening the deficit is an expected 5% increase in government spending, the source of which are autonomous programs that don't require any sort of congressional authorization or review. For instance, the CBO said there is a $40 billion increase in what the Education Department will pay on past student loans. There wasn't much of a change in the estimated costs of the largest federal programs, such as Social Security and Medicare. Total government spending this year "will reach $4.008 trillion," the CBO said.

One thing the U.S. government could consider is the imposition of some sort of regulation that requires taxes to be filed within a shorter time frame, or places a fiscal penalty on those who fail to turn them in on time. It could also reduce military spending and increase corporation tax, particularly for companies in the tech sector. The only problem is that neither of these can be done without lobbyists rejecting the moves from either side.