U.S. Won’t Hit Borrowing Limit Until Second Half of 2023
Congress struck a deal in December to raise the government’s debt limit to roughly $31.4 trillion.
Photo:
Patrick Semansky/Associated Press
Congress likely won’t need to raise the federal government’s borrowing limit before the third quarter of 2023, reflecting strong growth in tax collections, according to a new projection from the Bipartisan Policy Center released Tuesday.
That time frame for when the U.S. will hit its congressionally mandated debt borrowing limit—and the Treasury Department would exhaust any special measures that would allow it to continue meeting the nation’s obligations—is well beyond this fall’s midterm elections.
Lawmakers in December passed a debt-limit increase of $2.5 trillion, an amount designed to authorize enough borrowing to last through the elections, which will determine the party that controls Congress.
The Bipartisan Policy Center’s projection of the so-called X-date is later than policy makers expected because of strong growth in tax revenues so far in 2022, said
Shai Akabas,
the think tank’s director of economic policy. Individual income tax payments are on track to reach $2.6 trillion, or 10.6% of the economy, in the fiscal year that ends Sept. 30, according to the nonpartisan Congressional Budget Office. That would mark a record high.
Congress in recent years has seen a handful of partisan standoffs over raising the debt limit, including one in 2011 that caused Standard & Poor’s to strip the U.S. of its triple-A credit rating for the first time.
Treasury Secretary Janet Yellen, who spoke at a House hearing last week, warned in November that the U.S. government would soon be unable to pay its bills.
Photo:
Jose Luis Magana/Associated Press
The federal government in late 2021 again bumped up against the debt limit, which prompted warnings from Treasury Secretary
Janet Yellen
about potential dire consequences for the U.S. economy and financial markets if the nation exhausted available resources to meet all of its obligations.
Congress avoided that outcome when lawmakers struck the December deal to raise the debt limit to roughly $31.4 trillion.
The Bipartisan Policy Center notes that its newest projection is subject to considerable uncertainty, with the possibility for the X-date to arrive as soon as the first quarter of 2023 or substantially later than the third quarter of 2023.
The think tank said its projection could change “in the event of major economic shocks, like a recession, or legislative actions that significantly alter fiscal policy.”
Write to Amara Omeokwe at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the June 15, 2022, print edition as ‘Debt Limit to Be Hit Later Than Expected.’
Congress struck a deal in December to raise the government’s debt limit to roughly $31.4 trillion.
Photo:
Patrick Semansky/Associated Press
Congress likely won’t need to raise the federal government’s borrowing limit before the third quarter of 2023, reflecting strong growth in tax collections, according to a new projection from the Bipartisan Policy Center released Tuesday.
That time frame for when the U.S. will hit its congressionally mandated debt borrowing limit—and the Treasury Department would exhaust any special measures that would allow it to continue meeting the nation’s obligations—is well beyond this fall’s midterm elections.
Lawmakers in December passed a debt-limit increase of $2.5 trillion, an amount designed to authorize enough borrowing to last through the elections, which will determine the party that controls Congress.
The Bipartisan Policy Center’s projection of the so-called X-date is later than policy makers expected because of strong growth in tax revenues so far in 2022, said
Shai Akabas,
the think tank’s director of economic policy. Individual income tax payments are on track to reach $2.6 trillion, or 10.6% of the economy, in the fiscal year that ends Sept. 30, according to the nonpartisan Congressional Budget Office. That would mark a record high.
Congress in recent years has seen a handful of partisan standoffs over raising the debt limit, including one in 2011 that caused Standard & Poor’s to strip the U.S. of its triple-A credit rating for the first time.
Treasury Secretary Janet Yellen, who spoke at a House hearing last week, warned in November that the U.S. government would soon be unable to pay its bills.
Photo:
Jose Luis Magana/Associated Press
The federal government in late 2021 again bumped up against the debt limit, which prompted warnings from Treasury Secretary
Janet Yellen
about potential dire consequences for the U.S. economy and financial markets if the nation exhausted available resources to meet all of its obligations.
Congress avoided that outcome when lawmakers struck the December deal to raise the debt limit to roughly $31.4 trillion.
The Bipartisan Policy Center notes that its newest projection is subject to considerable uncertainty, with the possibility for the X-date to arrive as soon as the first quarter of 2023 or substantially later than the third quarter of 2023.
The think tank said its projection could change “in the event of major economic shocks, like a recession, or legislative actions that significantly alter fiscal policy.”
Write to Amara Omeokwe at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the June 15, 2022, print edition as ‘Debt Limit to Be Hit Later Than Expected.’
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