As Washington lurches from one financial crisis to another, the next threat to the government defaulting on its bills could come as early as mid-July, according to a new analysis.
The “X date” could be delayed until October, but without action to suspend or raise the debt ceiling above $36.1 trillion, the Treasury could run out of budgeting gimmicks to forestall defaulting on its bills, according to the Bipartisan Policy Center’s report shared with Secrets Monday.
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“Fiscal responsibility is not just about avoiding financial calamity time and time again — it’s about ensuring economic stability and paying our bills on time,” said Margaret Spellings, president and CEO of the Bipartisan Policy Center.
“This year presents many opportunities to begin getting our fiscal house in order without risking the full faith and credit of the U.S. Policymakers must commit to responsible budgeting, which starts with avoiding debt limit brinksmanship and its impacts on our economy,” the Bush-era education secretary added.
Congress and President Donald Trump have appeared eager to prevent fiscal disasters, but that may be ending as liberal activists press Democratic lawmakers to block any of Trump’s initiatives.
While a budget deal was approved with the help of some top Democrats, notably Senate Minority Leader Chuck Schumer (D-NY), it looks like Trump’s bid to extend tax cuts approved in his first term will be difficult, as will his other moves to end taxes on tips and Social Security checks.
The debt crisis then arrives in the summer, and depending on how much tax revenue is raised and how the Treasury handles its payment plans, the default “X date” will become clearer, the center said.
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Trump has said he would like to eliminate the debt ceiling, but conservatives like it because it puts a limit on spending.
“Lawmakers cannot afford to delay action on the debt limit,” said Shai Akabas, vice president of economic policy at BPC. “Congress has a full plate in 2025, but addressing the debt limit well ahead of the X date should rise to the top of the priority list right now. History has shown that even approaching the X date can lead to market volatility, higher borrowing costs, and reduced confidence in U.S. fiscal stability.”
