Once again, the U.S. could be drifting toward a default crisis sometime between mid-July and October, according to an estimate this week from the Bipartisan Policy Center.
Addressing the issue soon would be welcome in the world of global finance. However, brinkmanship over the risk of a default of at least part of what is now a $36.2 trillion figure by the Treasury Department’s count is nothing new.
Rather than becoming old hat, it’s more of a panic that eventually sets in as deadlines approach. Even the approach of a debt showdown has resulted in downgrades of the U.S. credit rating.
Recommended For You
According to the Bipartisan Policy Center, a number of factors will affect when a default could happen — a term called the X Date. The first is the current tax season. Tax collections typically bring in large amounts of cash in April that can help put off a default date. Extension filings can put off payments, although filers are supposed to pay required taxes by April 15. BPC says that residents in part of 12 states have started filing extension requests and many have extensions that have carried over from the 2023 tax year, which was supposed to be paid last year.
Existing disaster relief efforts and the start of hurricane season in June also raise the potential for delays in payment. “The strength of the economy, new revenue from tariffs, and changes in and the timing of planned spending or adjustments by Congress and the Department of Government Efficiency could also impact projections this year,” the group wrote.
Before leaving office, former Treasury Secretary Janet Yellen told Congress that on January 21, 2025, the department would start using accounting tricks, usually called extraordinary measures, to keep meeting obligations.
On March 14, current Treasury Secretary Scott Bessent informed Congress that the government would temporarily cease investments into several federal pensions and health benefit funds for former employees. This would last through June 27, 2025.
“The period of time that cash and extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the unpredictability of tax receipts and the normal challenges of forecasting the payments and receipts of the U.S. government months into the future,” Bessent wrote. “Given this unavoidable uncertainty, Treasury is not able at this time to provide an estimate of how long its cash and extraordinary measures may last.”
Bessent said that the department expected to provide an update in the first half of May.
"Lawmakers cannot afford to delay action on the debt limit," Shai Akabas, vice president of economic policy at BPC, said in prepared remarks. “Addressing debt limit well ahead of the X Date should rise to the top of the priority list."
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
