The U.S. is most likely to default on its $36 trillion national debt sometime between mid-July and early October if Congress doesn’t act, the Bipartisan Policy Center predicted Monday.
On Capitol Hill, the trusted forecast from the nonpartisan think tank is crucial to the GOP’s legislative agenda. Republican leaders are now trying to decide whether to increase the debt limit in their behemoth party-line package or to instead begin bipartisan negotiations with Democrats. Some Republican lawmakers have said they hope a debt limit forecast might inspire President Donald Trump to finally start focusing on the issue.
It’s the first public prediction of a range for the so-called X-date since the Treasury Department began deploying “extraordinary measures” to free up more cash after the debt ceiling was reinstated on Jan. 1. The new analysis is likely to quell concerns among some top lawmakers who previously warned that the U.S. could default on its debt as soon as May.
GOP leaders could use the fiscal cliff to heighten the urgency to pass the party-line package they hope to enact this year to extend trillions of dollars in tax breaks, along with hundreds of billions of dollars in new border security and military spending. Trying to handle the debt limit through the party-line process could also complicate top Republicans’ efforts to build support around the package, since many fiscal conservatives are reluctant to vote for increasing U.S. borrowing authority.
Debt limit forecasters are expected to release a narrower X-date prediction after most tax receipts have landed at the IRS in April. While it’s “quite unlikely,” there is still a possibility that the U.S. could run out of borrowing power in early June if that gush of tax revenue comes in far below projections, the Bipartisan Policy Center cautioned.
The cost-cutting efforts of the Department of Government Efficiency effort headed by Elon Musk could also affect cashflow enough to change the X-date prediction, along with the strength of the economy, tariffs and any new spending or cuts Congress approves, the center said.
Besides regular tax season, there are several other points in the calendar year when a substantial amount of cash is freed up. That includes quarterly tax receipts in mid-June, which produce tens of billions of dollars from corporations and self-employed people, along with a move the Treasury Department can make in late June to extract more borrowing power from a key federal retirement fund, followed by another quarterly tax deadline in mid-September.
Congress’ nonpartisan scorekeeper, the Congressional Budget Office, plans to release its debt limit forecast on Wednesday. Treasury Secretary Scott Bessent has told lawmakers he plans to send his own projection in the first half of May.
