Washington, D.C.– After incorporating the latest data, BPC now projects the debt limit “X Date” will arrive in fall 2019, unless Congress acts to extend the limit prior to that point.
The debt limit was reinstated over the weekend at a record high of $22 trillion as BPC’s earlier analysis predicted, and the Treasury Department began to deploy legally authorized “extraordinary measures” to continue paying all the nation’s bills for an additional period of time. When those measures are exhausted, Treasury will arrive at the “X Date,” when it would be forced to default on some of the federal government’s obligations.
“Waiting until the last minute to act on the debt limit is reckless, because we don’t even know when that ‘last minute’ will be,” said Shai Akabas, BPC’s director of economic policy. “It would be a mistake for Congress, financial market participants, or frankly any American to breathe easy until this threat to the global economy is defused — preferably once and for all.”
With updated model runs, BPC has narrowed its “X Date” projection (which had been “sometime after mid-summer”) to fall 2019, although there remains a small chance that the “X Date” could come in late summer under a very pessimistic scenario.
BPC’s “X Date” projection carries significant uncertainty, not only due to unforeseen changes in economic or fiscal conditions, but because of the still-unclear effects of the 2017 tax law and the timing and magnitude of tax refunds in the wake of this year’s partial government shutdown.
“As we always say when it comes to the debt limit, risks are risks. Uncertainty has triggered market responses in the past and will absolutely do so again if no action is taken.”
Shai Akabas is available for comment.
BPC will publish a blog post shortly that further details its debt limit projection. For the latest analysis, follow BPC’s Debt Limit Analysis at: https://bipartisanpolicy.org/debt-limit/.