Debt Default Could Occur Between Mid-December and Mid-February: Analysis
The Debt

Debt Default Could Occur Between Mid-December and Mid-February: Analysis

Brian Snyder

You probably haven’t heard much about the debt ceiling lately, but get ready to start hearing about it on a regular basis over the next few weeks.

According to the Bipartisan Policy Center Friday, the day on which the U.S. Treasury will no longer be able to pay all its bills due to restrictions imposed by the debt ceiling will arrive sometime between the middle of December and the middle of February.

The so-called X Date was pushed back from mid-October when Congress approved a $480 billion increase in the debt ceiling earlier this month, with the expectation that the funds would hold the Treasury over until at least December 3.

But that “was only a temporary fix,” BPC’s Shai Akabas said in a statement. The Treasury has already hit the new debt limit, BPC reports, and is once again resorting to “extraordinary measures” to keep payments flowing.

The two-month range for the potential debt default reflects in part the high degree of uncertainty over the status of the bipartisan infrastructure bill. If that bill passes, the X Date could move up, since the legislation calls for a $118 billion transfer from the Treasury Department to the Highway Trust Fund. Just how that transfer will play out is unclear, though, leading to more uncertainty than usual around the Treasury’s short-term payment requirements.

An even bigger uncertainty is how Congress plans to go about raising or suspending the debt ceiling for more than just a few weeks. Republicans want Democrats to raise the limit on their own, via the budget reconciliation process they plan to use to pass President Biden’s Build Back Better bill. But not all Democrats agree, meaning there may be another showdown over the issue in just a few weeks.