A new analysis finds that the “X-date” debt limit could be reached within weeks
President Biden and Republican lawmakers are not close to a deal to raise or suspend the debt limit, but Mr. Biden invited congressional leaders to the White House on Tuesday to talk about a way forward.
The new analysis expects the so-called “Date X” to arrive as early as early June to early August, narrowing the organization’s previous forecasts. The history of the bipartisan Policy Center’s X aligns closely with Treasury Department estimates. Treasury Secretary Janet Yellen warned Congressional leaders announced in a speech last week that the United States may not be able to pay its bills as soon as June 1st.
“I still don’t think it’s time to panic,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center, “but it certainly is time to start worrying because we’re probably only weeks away from Date X.” .
Akabas expressed concern about the status of the discussions at this late date: “I think we are already in the early stage of these negotiations between these two parties.”
Neither side has indicated a willingness to compromise as they head into the high-stakes Oval Office showdown. Mr. Biden has called on Congress to pass a bill to raise the debt limit without strings attached, while Republicans are calling for debt-reduction legislation combined with spending cuts.
The United States national debt has ballooned to more than $31 trillion. But raising the debt limit won’t give the green light to new spending — it will only allow the government to pay what it already owes and avoid defaulting for the first time ever. The Treasury Department has been using so-called extraordinary measures to pay the bills since January, when the nation hit the debt ceiling. It expanded the nation’s ability to pay its debts by taking measures such as adjusting investments in some pension and health funds in the civil service.
“We give a range specifically for the purpose that we don’t feel we have confidence in naming a particular X-Date,” Akabas said. “This year, there is a very noticeable pattern within the X-Date window, so there is an early June timeframe that we are concerned about, which is a major concern.”
The uncertainty in the bipartisan policy center’s forecasts is the result of its reliance on estimates of the hundreds of billions of dollars the government is spending and receiving each month.
The center’s initial projections in February indicated that the timing of Date X would depend heavily on the 2023 tax season. Soon after, many states were given extended filing deadlines through October, raising the odds of lower revenues in early June. In general, the receipts over the past few weeks were less than expected, in contrast to last year.
Revenue received during the rest of the month will affect whether the US government has enough money to pay the bills and thus date X. If the US can get through the first half of June, it is set to receive a cash inflow around June 15th with the filing deadline Quarterly. The money could help the Treasury delay a default until the end of the month.
Approximately another $145 billion in additional purportedly extraordinary measures is scheduled to be made available on June 30. If all that stops, the Treasury should have enough room to pay the bills until at least early July and possibly several weeks after that, the Policy Center projects.
The center plans to continue updating its forecasts in the coming days, as more data on cash flows become available.
