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Lack of Debt Limit Action by August No Danger

Bloomberg BNA

Tuesday, June 13, 2017

Treasury Secretary Steven Mnuchin said he wants the federal debt limit raised before lawmakers leave for a five-week break in August, but failure to do so won’t lead to a risk of default.

No Change: BPC

Earlier in the day, the Bipartisan Policy Center (BPC) reiterated its projection that the “X date”—the date on which Treasury would be unable to pay all of the government’s financial obligations—would fall sometime in October or November. That’s the same window that the BPC had projected before the April tax receipts, which are a crucial factor in the government’s fiscal picture.

“Federal revenues have thus far grown slower than projected for the year by the Congressional Budget Office, but the underperformance has not been large enough for BPC to change its ‘X Date’ range at this time,” BPC analysts Shai Akabas and Tim Shaw wrote.

BPC always emphasizes that its projections cannot anticipate major economic or legislative changes. If the revenue trend seen in recent months becomes more pronounced into the summer, it could move our ‘X Date’ projection range in an earlier direction,” the pair wrote.

They cited Oct. 2 as a “particularly risky day” because a large payment to a military retirement trust fund is due then.

The BPC analysis is close to that of Lou Crandall, chief economist with Wrightson ICAP, an analytical firm.

KEYWORDS: DEBT LIMIT, CONGRESSIONAL BUDGET OFFICE, DEPARTMENT OF TREASURY, X DATE, STEVEN MNUCHIN