Negotiations on the debt ceiling appear to be making progress, but the the hard deadline or X-date for when the government won’t be able to pay the bills is unclear. Most current estimates are for early June, but opinions vary on precisely when. The U.S. Treasury has given a range, and the Congressional Budget Office has disclosed additional detail of payment timings, but no one has yet estimated a precise date as the Treasury juggles its payments.
The Treasury Assessment
Since the U.S. hit the debt ceiling in January 2023 and invoked extraordinary measures to keep operating, there have been differing estimates of when the government will be unable to meet its obligations. That’s the so-called X-date.
The Treasury Secretary, Janet Yellen, wrote in a letter dated May 22 that “we estimate that it is highly likely that Treasury will no longer be able to satisfy all of the government’s obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1.” Furthermore, at a virtual summit appearance on Thursday May 25 Yellen reinforced that saying, “it seems almost certain that we will not be able to get past early June.”
Some also believe that a recently announced auction of Treasury debt suggests that the X date is not likely to be as soon as June 1.
Extraordinary Measures
The funding available to the government under extraordinary measures is also running low. The Treasury provides periodic updates on debt limit activity and the update from May 19 showed that $92 billion of funds under extraordinary measures were remaining from $335 billion authorized. However, though generally declining, available funds under extraordinary measures, did increase slightly from a week prior.
Payment Timings
The Congressional Budget Office provided details on the timing of government payments in May. The government pays a large share of pay and benefits for the military and civil service on the 1st of the month. Then interest payments on government debt typically come on the 15th and the end of the month. Tax receipts are more evenly spread across the month, but the government will receive corporate tax payments on June 15th, which, if it can make it until then could provide additional funding for many weeks on based CBO estimates from May.
It seems that upcoming wage and benefits payments on June 1 estimated at around $25 billion will likely take the government closer to the debt limit, but exactly when funds are exhausted remains hard to predict, even by the Treasury itself.
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