Washington, D.C. – The Bipartisan Policy Center has narrowed its debt limit projection and now estimates the “X Date,” when Treasury will be unable to fully pay the federal government’s bills, will most likely fall in early to mid–October.
After analyzing the latest data, with particular focus on Treasury’s quarterly individual and corporate tax receipt collections in June, BPC narrowed its projection of the “X Date” from a previous estimated range of October to November.
“We now have a better sense of what revenues and spending will be over the next few months after seeing the Treasury data on individual and corporate tax receipts for June,” Shai Akabas, fiscal policy director at BPC, said.
The exact date when the federal government will be unable to fully pay all of its bills remains uncertain, but it has become clearer that it will be reached sooner rather than later.
BPC’s estimate is in the same range as the Congressional Budget Office’s recently updated projection of early to mid-October. Since reaching the debt limit in March, the Treasury Department has been using so-called “extraordinary measures,” which are temporary accounting mechanisms that allow flexibility to generate more cash when at the debt limit. The day those measures and Treasury’s cash on hand run out is known as the “X Date.”
“The exact date when the federal government will be unable to fully pay all of its bills remains uncertain, but it has become clearer that it will be reached sooner rather than later,” Akabas said. “To avoid the serious economic consequences that could occur if the government was unable to fully pay its bills, Congress will need to act in a timely manner.”
Federal spending in October typically far outweighs federal revenues, with an average cash deficit in October of $104 billion over the past five years. Many of October’s monthly payments are front-loaded, leading to an increased risk of crossing the “X Date” early in the month. In addition to recurring Social Security and Medicare payments, there is a large required payment to the Military Retirement Trust Fund on October 2, which was $81 billion last year.