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February 2023 Debt Limit Analysis

When Is The X Date?

Absent congressional action, BPC projects that the “X Date”—the date when the federal government will be unable to pay all of its bills in full and on time—is most likely to occur during the summer or early fall of 2023.

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Key Takeaways:

  • On January 19, 2023, the Treasury Department (Treasury) ran up against its $31.4 trillion debt limit and exhausted its traditional borrowing authority. At that point, Treasury Secretary Janet Yellen deployed emergency borrowing authority—known as “extraordinary measures”—to continue fully funding government operations.
  • BPC projects that if Congress does not raise or suspend the debt limit, Treasury will most likely be unable to meet its financial obligations at some point during the summer or early fall of 2023 (what we call the “X Date range”).
  • BPC is providing estimates earlier than usual this year—roughly five months from the start of BPC’s X Date range—to maximize the time policymakers have to act.
  • Beyond usual fluctuations in government cash flows, the X Date’s timing will depend heavily on 2022 tax collections in a fragile post-pandemic economy with low unemployment, persistent inflation, and recession fears. Indeed, if tax season revenues fall far short of expectations, there could even be a “too close for comfort” situation prior to quarterly tax receipts due on June 15.
  • The government is projected to spend more than $3 trillion and take in approximately $2.5 trillion between February and June, and variation of a few hundred billion dollars in either direction would not be shocking yet would markedly affect the X Date. As a result, the projection window is wider than usual.
  • BPC’s range takes into account newly available data from the Congressional Budget Office and the Treasury Department. BPC will update its projections as soon as the data warrants.
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