US could face default as soon as June if debt ceiling isn’t lifted, says thinktank
The US could face an unprecedented default on its obligations as soon as early June if Congress does not act to lift the debt limit, a Washington thinktank said on Wednesday.
The Bipartisan Policy Center (BPC), which forecasts the approximate “X-date” when the government will no longer be able to meet its financial obligations on time, said the US will reach its statutory debt limit as soon as the summer or early fall of 2023.
That inches up from the center’s previous prediction, in June 2022, that the “extraordinary measures” the US Treasury uses to pay the government’s bills would not be exhausted before the third quarter of 2023.
Previewing the data for reporters, Shai Akabas, BPC director of economic policy, said the new projections reflect “considerable uncertainty in our nation’s current economic outlook”.
“Policymakers have an opportunity now to inject certainty into the US and global economy by beginning, in earnest, bipartisan negotiations around our nation’s fiscal health and taking action to uphold the full faith and credit of the United States well before the X-date,” he said.
Akabas said the December 2022 big spending bill, an extended pause on student loan repayments and high interest rates resulting in higher costs to service US debt have contributed to moving up the X-date.
The treasury secretary, Janet Yellen, notified Congress in January that her agency was resorting to “extraordinary measures” to avoid default, and that “it is unlikely that cash and extraordinary measures will be exhausted before early June”.
Yellen said her actions would buy time until Congress can pass legislation that will either raise the $31.4tn borrowing authority or suspend the limit for a period of time. But she said it’s “critical
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