According to projections by the Bipartisan Policy Center, the U.S. government may risk defaulting on a portion of its $36.6 trillion debt between mid-July and early October if Congress does not act to raise the borrowing limit. This pattern of negotiations being left to the last minute has unsettled financial markets and caused credit agencies to lower their ratings on the government’s creditworthiness despite Congress’s own decisions contributing to the increasing national debt.
The Congressional Budget Office is expected to provide its own estimate for the X-date, when the Treasury Department may be unable to meet all its financial obligations. It is crucial for lawmakers to address the debt limit well before the X-date, emphasized Shai Akabas, the vice president of economic policy at BPC.
The U.S. has never defaulted on its debt before, and any hint of such a possibility can cause global financial markets to become anxious. Factors influencing the precise X-date include tax receipts, economic conditions, U.S. tariff policies, and extensions for tax filings related to recent disasters.
While an early June X-date is considered unlikely, it could occur if tax collections fall short of estimates leading up to the June 15 quarterly receipts. The effects of a potential default were evident during a 2023 debt ceiling standoff, which impacted the country’s credit rating significantly.
