There’s a 50% chance the federal government will default on the national debt if Congress doesn’t raise or suspend the borrowing limit before lawmakers leave for Christmas recess, according to the Bipartisan Policy Center (BPC).
The Hill reported that the Washington think tank believes the Treasury Department will likely be unable to keep the U.S. solvent sometime between mid-December and early January. But the BPC said the “X Date” is likely to fall sometime in the first half of the time range.
The X Date is the date when Treasury Secretary Janet Yellen will run out of maneuvering room to avoid hitting the debt limit if Congress does not act, the Associated Press noted.
In September, the BPC noted that government would likely face default between mid-October and mid-November. But President Joe Biden signed into law a bill raising the limit until early December.
The Hill noted that the group’s latest projection begins slightly later than the one it had predicted in October.
“At this point, it’s roughly a coin toss whether the X Date hits before Congress returns from its December holiday recess,” the BPC’s Shai Akabas said. “Based on the data we have right now, failing to act before then would be a high-stakes gamble.”
Meanwhile, Yellen told lawmakers on Tuesday she believes the federal government will exhaust all its maneuvering room to avoid default soon after Dec. 15, the AP noted.
“To ensure the full faith and credit of the United States, it is critical that Congress raise or suspend the debt limit as soon as possible,” Yellen wrote to congressional leaders.
And The Hill pointed out that under the infrastructure bill signed by Biden, the Treasury Department is required to transfer $118 billion to the Highway Trust Fund by Dec. 15.
Once transferred, the money would not be available to cover spending already approved by Congresses and presidents over several decades.
“With enactment of the bipartisan infrastructure package and Treasury’s announcement, we now know that the transfer will expedite the X Date’s arrival,” Akabas said. “The clock has always been ticking, but it just jumped ahead an hour.”