Washington, D.C. – The Bipartisan Policy Center (BPC) has updated its debt limit projections and now estimates that the most likely “X-date” range for when the federal government would be unable to make all payments in full and on time is November 10-16. That is a narrower range than the Nov. 10-19 projected earlier this month.
Treasury Secretary Jack Lew has projected that extraordinary measures will run out on Nov. 3, after which the United States will have exhausted its net borrowing authority. Although the projections by BPC and Treasury are for different circumstances, Treasury estimates that it will have approximately $30 billion cash on hand as of Nov. 3, a figure that is roughly consistent with BPC’s “X-date” range for when that cash is most likely to be depleted and force the federal government to miss payments.
If Treasury ran out of cash near the beginning of Nov. 10, BPC projects that it would be unable to fulfill on time approximately 37 percent of total obligations for the rest of the month. Furthermore, this estimate assumes that Treasury has the capability to operate smoothly and prioritize spending in an unprecedented environment in which it has no net borrowing authority.
“The reality would likely be more chaotic and entail severe risks, particularly with hundreds of billions of dollars of debt scheduled to be rolled over and an interest payment of over $30 billion coming due on Nov. 16,” Shai Akabas, associate director of economic policy, said.
As always, BPC’s projections are subject to uncertainty. Policymakers should weigh this uncertainty and the risks outlined in our report as they deliberate. In order to guarantee that all obligations are paid in full and on time, action on the debt limit would need to be taken well in advance of Nov. 10.
Shai Akabas is available for comment.