US $36T debt ceiling could be breached in months

by Jarrell Dillard and Alexandra Harris

The US could breach the debt ceiling sometime between mid-July and October if Congress does not act, according to the Bipartisan Policy Center.

The Treasury Department has been using accounting maneuvers, known as extraordinary measures, since Jan. 21 in an effort to avoid breaching the $36.1 trillion limit. The US Treasury has $163 billion of extraordinary measures left, in addition to its cash pile, to help keep paying the government’s bills, the department has said, citing data as of March 19.

BPC’s model released Monday presents a broad window for the so-called X-date compared to other estimates.

The US Treasury hasn’t forecast a date by which it could run out of room to keep paying the government’s obligations. Wall Street strategists largely estimate that date could fall around late-July to late-August without an increase in the debt limit. Some forecasts, however, put the timing as early as late May.

The BPC also noted that while unlikely, if less revenue comes in during this tax season than expected, “there is a potential for heightened X Date risk in early June.”

Republican lawmakers have not yet come to a consensus on how to address the debt ceiling. House Republicans included a $4 trillion debt limit increase in a budget proposal that could be used to pass the hike through the Senate without Democratic support. However, some Senate Republicans have opposed that method.