If Congress did not take measures to raise or suspend the country's debt restrictions, the US could run out of cash to pay bills by mid-July.
The deadline known as the “X-Date” – the moment when the US fails to fulfill its financial obligations and may default on its debt is the most common financial milestone in Washington and Wall Street.
There is considerable uncertainty about the date. This relies on estimates of the amount of wavy rooms the Treasury must use accounting operations known as “extraordinary measures,” which keeps paying government bills and shifting money. The think tank, the Bipartisan Policy Center, provided estimates suggesting that X-Date could be slower in the beginning of October.
Efforts to address debt restrictions could potentially consume Congress and the Trump administration later this year as Republicans compete to enact trillions of dollars in tax cuts.
A debt limit is the total limit of the amount the United States is allowed to borrow to fund and meet its financial obligations.
Because the federal government operates a budget deficit, that means spending more than it would bring about taxes and other income. These obligations include funding for social safety net programs, salaries of military members, and payments from investors who have purchased US government debt in exchange for interest.
After a long battle, lawmakers agreed in June 2023 to suspend the $31.4 trillion debt limit until January 1, 2025.
National debt is currently approaching $37 trillion. Republicans have expressed their commitment to curbing unnecessary spending as they cut federal jobs in government agencies, but lawmakers have shown little desire to cut social safety net programs, the biggest driver of increasing debt.
“Policymakers must commit to a liability budget that begins with avoiding the brink of debt restrictions and its impact on the economy,” Margaret Spelling, president of the Bipartisan Policy Center, said in a statement.
The analysis says disaster relief spending, the pace of tax 2024 collection, and additional government revenue from Trump's tariffs, could affect the timing of the X day. Savings from reductions recommended by the new government ministry's efficiency could also extend deadlines.
Janet L. Yellen, the Treasury Secretary under President Joseph R. Biden Jr., told Congress in mid-January that the Treasury should begin using “extraordinary measures” on January 21.
These measures are accounting operations that may prevent the government from violating debt restrictions. It can include stopping certain types of investments in government workers' savings plans.
Before taking office last year, President Trump said he believed that debt restrictions were a “trap” set by Democrats, urging lawmakers to lift their borrowing hats and to abolish them entirely.
Treasury Secretary Scott Bescent expressed skepticism about repealing debt restrictions during the January confirmation hearing. However, he said he would study the ideas and potentially work with Democrats. Many have long said debt restrictions create unnecessary risks with cap changes. Bescent told Bloomberg News last month that he was discussing the issue with large U.S. debt holders.
In a letter to Congress this month, Bescent said Yellen continues to roll out the measures he is moving. They included a suspension of investments in the Civil Service and Retirement Disability Fund and the Postal Service Retirement Health Benefit Fund.
The Treasury Secretary said he expected to provide an update on how long cash will last in May, pointing to the “inevitable uncertainty” surrounding such forecasts.
“I respectfully urge Congress to act quickly to protect the full faith and credibility of America,” writes Bescent.
Last month, House Republicans released a budget summary that would increase debt limits by $4 trillion and approve tax cuts of more than $4 trillion.
It is not clear how many Senate Republicans support such a measure to lift borrowing caps, or whether they require the support of some Democrats.
