By Richard Cowan
WASHINGTON (Reuters) – The U.S. government will risk defaulting on some of its $36.6 trillion in debt sometime between mid-July and early October unless Congress acts to raise the cap on Washington’s borrowing limit, the Bipartisan Policy Center think tank projected on Monday.
Lawmakers have repeatedly taken negotiations over raising the government’s borrowing limit to the last minute, a trend that has rattled financial markets and led the major credit agencies to lower their ratings on the federal government’s creditworthiness.
The brinkmanship has continued despite the fact that Congress’s own decisions, both to authorize new spending and to cut taxes, have pushed the national debt higher.
The non-partisan Congressional Budget Office on Wednesday will make its own projection for the so-called X-date, when the Treasury Department is no longer able to cover all of its obligations, according to a spokesperson.
“Lawmakers cannot afford to delay action on the debt limit,” Shai Akabas, vice president of economic policy at BPC said in a statement. “Addressing debt limit well ahead of the X Date should rise to the top of the priority list.”
The U.S. has never defaulted on its debt and global financial markets become jittery if there is even a whiff of that potentially occurring.
A 2023 debt ceiling showdown pushed the U.S. to the brink of default and hurt its credit rating.
It is difficult to nail down a precise X-date because it depends upon several factors, including the flow of tax receipts with the mid-April deadline for Americans to file their annual tax returns.
This year, several other factors will play into the deadline, including signs of a softening economy and the imposition of U.S. tariffs on foreign goods by President Donald Trump.
Also, tax filing extensions to help victims of recent natural disasters are also playing into the flow of revenues into government coffers.
BPC noted that while unlikely, there is the potential for an early June X-date if tax collections lag behind estimates ahead of quarterly receipts on June 15.
(Reporting by Richard Cowan; Editing by Scott Malone and Alistair Bell)
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