Thursday's Congressional Budget Office report also predicts that the federal government's budget deficit will spike to $693 billion this year, $134 billion more than it predicted in January.
The breathing room offered by the CBO report and Mnuchin's recent statements probably mean that Congress won't act on the politically toxic debt limit issue until September.
If Congress doesn't raise the debt limit in time, CBO warns it would "ultimately lead to delays of payments for government programs and activities, a default on the government's debt obligations, or both." On the deficit, CBO says "one reason for the sharp rise in the deficit in 2017 is the slow growth in revenue collections." It predicts that revenues will rise by only 1 percent this year, even as spending grows by 5 percent, mostly because of continuing growth in government benefit programs such as Social Security and Medicare.
But the projected $686 billion increase would dwarf the improvements to the government's deficit picture that would result from either the House or Senate health care legislation, which blends benefit cuts and tax cuts to reduce deficits by up to $321 billion over the coming decade.
But CBO sees a slowdown over the next couple of years, with growth over 2019-2020 averaging just 1.5 percent.