Loren Adler contributed to this post.
Today, Fannie Mae announced that it will pay an unusually large dividend of $59.4 billion to the U.S. Treasury by June 30, 2013. Yesterday, Freddie Mac announced that it will send a $7.0 billion dividend to the U.S. Treasury in June. The Bipartisan Policy Center (BPC) has updated its previous debt limit projection to incorporate this new information.* We now estimate that the X Date – the day on which the federal government would no longer be able to pay all of its bills in full and on time due to lack of cash and borrowing authority – is most likely to occur sometime in October, if Congress does not take action related to the debt limit before that time.
Any projection this far in advance is highly uncertain, and our new estimate is based on the assumptions detailed in our previous analysis. An important upcoming factor is the level at which Treasury will set the reinstated debt limit on May 19; if the new limit turns out to be different than BPC’s assumption, our estimate could change. Additional factors that could affect our estimate over the coming months include, but are not limited to, changes in economic conditions, new fiscal policies, or further dividends from GSEs later in this calendar year that exceed our baseline assumptions. As always, we will continue to update our analysis as new information becomes available.
UPDATE: Secretary Lew Sends Debt Limit Letter to Congress, May 17, 2013
* The baseline used in our previous projections had assumed that dividend payments from the GSEs to the Treasury would be of similar magnitude to those made at the same time last year.
- H.R. 807 (the Full Faith and Credit Act) and the Debt Limit
- The Debt Limit: Updated X Date Projection